LIBRARY OF CONGRESS. 



Shelf.-^.Ol..Lt 



UNITED STATES OF AMERICA. 



OUTLINES OF LECTURES 



IN 



Elementary Economics 

Brown University 



BY 



HENRY B.V Gardner, ph. d. 

Associate Professor of Political Economy. 



COURSE I. 
Historical and Descriptive. 



These outlines are for class use only and are subject to the corrections and 
explanations made in the course of instruction. 



The Continental I^rinting Company, Uvek and 
iSqo. 



\t^c^-'p 

Pine Sts. '" y^ 



APR ia 1896^ 

PROVlDtNCE, R. 



Copyrighted 1800, 
By HENRY B. GARDNER. 






6^' 



CONTENTS. 



PAGE. 



Works of (jENeral Reference. ... 5 

Lecture I. Social Organisms. The Social Sciences. 

Economics. ........ 7 

Lecture IL Economics as Science and Art. Possi- 
bility of Social and Economic Laws. Limitations 
and Difficulties of the Social Sciences. Importance 
of Economics. Method of Study. . . . 11 

Lecture.s III — IV. Conditions Governing the De- 
\el()pment (^f Pxonomic Life. Economic Life of 
Savage and Barbarous Peoples and of Non-European 
Cix'ilizations. . . . . . . . . 15 

Lkcture V. Economic Life of (ireece. ... 22 

Lectures V'l — \TI. Economic Life of Rome. . . 28 

N.oTE on the (General Course of Political Development 

HI I^urojK' since the Roman Empire. ... 41 

LEcruRE VIII. Economic Life Under Feudalism. 

The Economic Organization of the Manor. . . 44 



PAliE. 

Lecture iX. The Industrial Organization of Town 

Life. The Gild System. . . . . 51 

Lecture X. Connnerce of Mediaeval Europe. . 58 

Lectures XI — XIL Territorial Expansion and Na- 
tional Economic Organization. - ... 63 

Lecture XII [. Economic Conditions about the Mid- 
dle of the Eighteenth Century. . . . . yj 

Lecture XIV. The Industrial Revolution: Causes. 85 

Lectures XV — XVI. Industrial Revolution : Results. 93 

Lectures XVII — XVIII. Economic Development 

Since 1850 103 

Lecture XIX. Generalization, from Economic History. 133 

Lecture XX. Organization of Modern Economic 

Life. Legal Framework. . . . . -139 

Lecture XXI. Organization of Modern t^conomic 

Life. Production. . . . . . .142 

Lecture XXII. The Mechanism of Exchange. Money. 155 

Lecture XXIII. The Mechanism of Exchange. Credit. 165 

Lecture XXIV. The Mechanism of Distribution. 172 



Works of General Reference. 



Bibliographies. 

R. R. BowKER AND George Iles : The Reader s Guide 
in Eccnioviic, Social and Political Science. 1891. 

Not (irst ra e, but the best in English. 

Encyclopedias and Dictionaries. 

Cyclopcedia of Political Science, Political Economy and 
of the Political History of the United States. Iidited 
by J. J. Lalor, 3 vols. 1882-4. 

Very uneven. Many articles are translations Irpm antiquated French 
and German works. Others are by modern specialists, and are ol 
great value. 

Dictionary of Political Economy. Edited by R. H. I. 
Palgrave. 1 894. 

Only one volume ( A-E) has been published. It covers a very wide range 
of topics, anil tlie articles though brief are generally excellenr. 

\ Nonveau Dictioniiavie d Economic Politique. Edited l^y 
L. Say and J. Chailley. 2 vols. 1892. 

The last French work; devoted principally to economic theoiy. 

HandwdrterbucJi der Staatszvissenschaften. Edited by 
Profs. Conrad, Elster, Lexis and Loening. 6 vols. 
1 890- 1 895. 

Most complete work of its kind. Many of the articles ai e extended 
treatises. 

HandbucJi der Politischen Oekonomie. Edited by G. 
Schonberg. 3rd. ed. 3 vols. 1 890-1. 

Comprehensive and excellent. Really an encyclopa'dia, though not so in 
name. 

Macleod H. D. Dictionary of Political Ecoiumiy. 

Only one volume (A-Cj has been published. 

M'CuLLOCH J. R. Dictionary of Commerce and Commer- 
cial Navigation. Lasted. 1882. 

Among general encyclopaedias, the Britannica and John- 
son's are valuable. 



6 U'orh' of General Reference. 

Statistical Works a\d Year-Books. 

Block M. L Enropc Politique et Sociale. 2nd ed. 1892. 
Gannet H. The Building of a Nation. 1895. 

Itelcrs to U.S. 

In addition to publishing the results of censuses taken 
at intervals of from five to ten years, the principal coun- 
tries publish statistical annuals, covering the several 
departments of national life ; Statistical Abstract of the 
United States; Statistical Abstract of tJte United 
Kingdom. 

Among the publications covering several countries the 
following are the most reliable: Statistical Abstract 
for the several Colonial and Other Possessions of the 
United Kingdom ; Statistical Abstract for the Principal 
and Other Foreign Countries (both English official publi- 
cations) ; The Statesman' s Yearbook (J. Scott Keltic) ; 
Almanach de Gotha ; Annuairc de P Economic Politique 
(M. Ijlock) ; Otto Hiibner' s GeograpJiisch-StatistiscJie Tab- 
ellcn (Fr. V. Juraschek) ; Ubcrsichten der Wetivii thscJiaft 
(Fr. V. Juraschek). 

The last appeiir.s at irregular intervals; last edition cover? ISS-i-O. Treats 
of protluctioiis of food products and raw materials, of the precious 
niotala and other circulating media and of means of communication. 

Among non-statistical annuals Appletojis Annual Ency- 
clopcedia and HahelT s Annual are valuable. 

Economic Geography. 

Chisolm G. G. Handbook of Commercial Geography. 

1889. 
Bartholomew J. G. Atlas of Commercial Geography. 



LECTURE I. 



SOCIAL ORGANISMS— THE SOCIAL SCIENCES— ECONOMICS. 

Social Organisms. 

Spenxer H. The Social Organism (pub. \\\ collect's (if 
his essays and in West. Rev., Jan. i860.) Principles of 
Sociology, Vol. I. Ft. II. (Spencer's discussion is full 
and suggestive, but he carries to extremes the analogy 
of social to animal organisms). 'Beuntschli J. K. The 
Thcoij of the State, Bk. I. Ch. I. Small A. W. and 
Vincent G. E. A)i Introduction to the Study of Soci- 
ety (traces in great detail and suggestively the growth 
and structure of the social organism). Newcomi; S. 
Principles of Political Economy, Bk. I. Ch. I. v. Mavr 
G. Statistik v. Gessellschaftslehre I, I, §§1-5 discusses 
the scientific study of social groups. 

Phases of the Life of Society and their Interrelations. 
'Ward L. F". Dynamic Sciology, Ft. I. Ch. VIII. 'Ely 
R. T. Outlines of Economics, Bk. I. Ch. XI. Knies 
K. Politische Oekonomie voni Geschichtlichen Stand- 
punctc, 2nd ed., 1883. Keynes J. N. Scope and 
Method of Political Economy, Ch. IV. § i and refer- 
ences there oriven. 



Social Organisms. 

Political economy or economics is a branch of social 
science which treats of the structure and life of social 
organisms in a way analogous to that in which the bio- 
loo-ical sciences treat of the structure and life of the 
organisms of the animal and vegetable world. An organ- 
ism may be defined as a living whole composed of perma- 
nently related interdependent parts, the action of each 
part being subordinate to, the action of all the parts 



Social Organisms. 

together constituting, the Hfe of the whole. The term 
social organism is applied to groups of individuals organ- 
ized, for the attainment of a common purpose, in such a 
way that the action of no individual or individuals con- 
stituting a part of the group is complete in itself but 
attains its purpose only as it is combined with the action 
of other individuals (an industrial enterprise, family, 
city, nation, the civilized world). 

The idea of an organism is borrowed from the ani- 
mal and vegetable world, and is applied to social groups 
only by analogy. The justification of this application 
is that it emphasizes certain fundamental characteristics 
of social groups, which are apt to be overlooked, the 
understanding of which is, however, essential to the 
development of social science. 

1. The individual in all that concerns his existence and 
progress is not independent of, but fundamentally, 
related to and dependent upon, other individuals with 
whom he is associated in social groups, and his actions 
and even his character are largely determined by the 
character and organization of the groups to which he 
belongs. 

2. These groups, therefore, may be treated as units of 
which individuals are the constituent but subordinate 
elements. 

3. The organization and character of the group at any 
given time are the products of a long process of 
development, analogous to evolution in the physical 
world. 

It should be noted in this connection, however, 
that {a) the form of social organisms is much less 
rigid than that of physical organisms, change much 
more frequent, and the lines of development much 
less restricted ; {b) conscious control by the organ- 
ism itself plays a much more important part in the 
development of social than of physical organisms. 
Social organisms vary greatly in i, size; 2, com- 
plexity of structure ; 3, importance and variety of 



The Social Sciences. 9 

interests subserved ; 4, coherence and detiniteness 
of structure. The soci.d organism which combines 
these characteristics in the highest degree is the 
modern nation, and where the term social organism 
is used without modification in these lectures the 
nation will be understood, the minor social organ- 
isms being regarded as component elements of the 
nation. 

Thk Social Sciences ; Phases oe the Social Organism. 

Like physical science social science is, for purposes of 
study, divided into a number of branches, or social 
sciences, each treating of some special form of social 
organization, the result of activities arising from a par- 
ticular class of human desires or instincts, which in 
turn usually corresptMid to some need. The following- 
enumeration will serve as an illustration (it makes no 
pretense to completeness or e.xclusiveness in method of 
classification). 

1. Industrial organization, outgrowth of the desire for 
the means of subsistence (food, clothing and shelter), 
which subserve the need of maintaining physical 
energy ; subject matter of economics. 

2. Family organization ; outgrowth of the sexual instinct, 
which subserves the need of reproduction of the 
species. 

3. Religious or ecclesiastical organization, outgrowth of 
complex of desires and instincts which we' may term 
the religious instinct, which subserves the needs of 
order, faith and morality. 

4. Educational organization, outgrowth of the desire for 
knowledge and intellectual development, which sub- 
serves the need of knowledge. 

5. Political organization (in broadest sense), outgrowth 
of a variety of instincts and desires (regard for cus- 
tom, desire for power, order, justice and the accom- 
plishment of large undertakings), which subserve the 
need of social order and cooperative action, the sub- 
ject matter of political science. 



10 Economics. 

Interrelations of the Social Sciences. 

It should always be borne in mind, however, that such 
a dixdsion of the subject matter of social science is 
purely for purposes of practical convenience, and must 
always be more or less arbitrary, since the different 
classes of human desires and the resulting forms of 
social organization are so closely interrelated that no 
clearly defined separation is possible. The character of 
the interrelations may be summarized as follows : 

1. The same class of desires gives rise to different kinds 
of activities and forms of social organization, and 
conversely. 

2. Different classes of desires give rise to the same kinds 
of activities and forms of social organization. 

3. The character of each class of desires, with its result- 
ing activities and forms of social organization, is 
largely determined by the character and stage of 
development of other classes of desires and their 
corresponding activities and forms of social organ- 
ization. 

It follows from this that though we may for conven- 
ience study separately the different phases of social life 
and organization, no single phase can be rightly under- 
stood except in its relation to social life as a whole. 

Definition of Economics. ' 

The scope of economics as related to the other social 
sciences has already been pointed out. Since, however, 
other desires give rise to the same kinds of activities 
as the desire for subsistence, it is proper and desirable 
to extend its scope so as to include such activities. 
Thus extended economics may be defined as the science 
which describes, explains, and traces the effects of the 
activities of men and the resulting forms of social organ- 
ization in so far as these activities are directed to 
obtaining the material means for the satisfaction of 
desires. 



LECTURE 



ECONOMICS AS SCIENCE AND ART— POSSIBILITY OF SOCIAL 
AND ECONOMIC LAWS-LIMITAl IONS AND DIFFICUL= 
TIES OF THE SOCIAL SCIENCES — IMPORTANCE OF 
ECONOniCS— HETHOD OF STUDY. 

Science, Law, and the Distinction Between a Science 
AND AN Art. 

Mill J. S. Logic Bk. Ill, Chs. IV, XII. Jevons \V. S. 
Principles of Science, y^^^. 1-4, 737-8. Lotze H. Logic. 
Bk. II, Ch. VIII. Newcomb S. Principles of Politi- 
cal Economy, Bk. I. Ch. III. Century Dictionary under 
" Science" and " Law." 

The Same, as Applied to Social Science and Economics. 
Mill J. S. Method in Political Economy, (in his essays 
on Some Unsettled Q?iestions in Political Economy, and 
West. Rev., 2^-6.) Logic \\k. VII. Keynes J. N. Scope 
and Method of Political Economy, Chs. II, III. Mar- 
shall A. Principles of Economics, ist ed. Vol. I, Bk. 
I, Chs. VII, VIII. Elements of Economics of Indnstry 
(1892), Bk. I, Chs. VI, VII. Walker F. A. Political 
Economy (advanced course), §§27-31. Sidgwick H. 
Principles of Political Economy, Introd. Ch. II. Cossa 
L. Introduction to the Study of Political Economy, 
Theoret. Ft. Ch. IV. Ely R. T. Outlines of Econom- 
ics, Bk. I, Ch. X, §4. Spencer H. Study of Sociology 
Ch. II. 'Ward L. F. Dynamic Sociology, Vol I, Introd. 
Froude G. a. The Science of History, in his Short 
Studies, Vol. IT Kingsley C. Limits of Exact Science 
as Applied to History, in West. Rev., 1861, and reprinted 
in collections of his essays. (F'roudeand Kingsley deny 
the possibility of a science of history). Wagner A. 
Grundlegung der Politischen Oekonomie, 3rd. ed. Pt. 
I, §§86-91. Knies K. Die Politisehe Ockojwmie vom 
Geschichtlichen Standpuncte, 2nd ed. II, i and 111,6. 
ScHONBERG G. Haudbuch d. Politischen Oekoiiomie, 
3rd ed. Vol. I, I, 13. CoHN G. Nationalokomie, pp. 
69-78. Rif.MELiN G. Reden v. Aufsdt.ze, Vol. I, p. i, 



1 2 . Sciaicc and A rt. 

Vol. II, p. iiS. Smith R. M. Statistics and Econovi- 
ics, IV, in Pubs, of Amer. Econom. Assoc. III. Block 
M. Traite dc Statistiqnc\ Chs. V and VI v. Mavr G. 
Die Gcsctzuidssigkcst im Gcscllscliaftslcben, (Smith, 
Block and v. Mayr treat the question from the statisti- 
cal standpoint). L.mjrent F. Etudes snr V Histoire 
dd'Hnmanite, 2nd ed. Vol. i8, reviews the more mipor- 
tant theories concerning the forces controlling the devel- 
opment of social life. Adams C. K. Manna/ of His- 
torical Literature, 3rd. ed. p. 67, gives a brief biblio- 
graphy on the subject. 

Science and Art. 

We have spoken of economics as a science. In this 
sense it is to be distinguished from the art of regulating 
economic life. 

Science; a science describes and explains a given class 
of phenomena. It is a body of knowledge expressed in 
the form of laws. A lazv is the statement of a constant 
relation of coexistence or sequence between phenomena. 
A science is exact in proportion to the quantitative 
exactness of the laws which it comprises ; it is com- 
plete in proportion as it covers all the relations be- 
tween all the phenomena with which it deals. 
Art ; an art points out the way for attaining a given 
purpose ; it lays down rules for action. 

Science and art are, however, closely related ; the 
development of the latter is the chief purpose of the 
study of the former, and an art cannot be highly 
developed without such study. The relation between 
the two as applied to economics is well brought out 
in D. A. Well's definition of economics: "The his- 
tory of the world's experience in endeavoring to bet- 
ter its material condition and the making of correct 
deductions from such experience with a view to 
present and future guidance in furtherance of the 
same purpose." (Forum XVI-539.) 
Possibility of a Science of Social Phenomena. 

I. Denied on the ground that freedom of the will destroys 
constancy in the relations of social phenomena and 



Extreme Variations in Certain Phenomena 



13 



hence excludes the p(\s.sil)ihty of formulating laws. 
2. Afifirmed on the ground that freedom of the will doe.s 

not exist, or admitting freedom of the will, on the 

ground that, 

(<'/■) freedom of the will is in a large proportion of 
cases subject to limitations so strong as to practi- 
cally nullify it : 

iyb) freedom of the will does not imply arbitrary action : 

(r) in large social groups individual eccentricities can- 
cel each other resulting in a very considerable 
degree of constancy between the action of the group 
as a whole and the conditions under which the 
action takes place. 

PlxTREME Variations in the Annual Recurrence of 

Certain Phenomena in the Countries and 

During the Periods Given. 

Tliis table is coiiiiiiled lioiii Block'.? L' Europe Politique et Sociiilc. 2nd ed. 
pp. .57, 60, 64, 4.50, 4.51, 460. In some cases. \vlii(;li may be there noted, the ligures do not 
cover all the years given at the heads of the columns. 





.Marriages. 


Births. 


Deaths. 


Murders 

and 

Homicides. 


Assaults. 


Suicides. 




Per 1(K)0 Inhabitants, 1881-18!K). 


Perl(IO,(X)0Inliabitants, 
1881-18«'J. 


Per 1,(MM),00(I 
Inhabitants. 
186.5-188'J. 


Un. Kingdom 
Denmark 


6.7— 7.2 
6.9— 7.8 
6.1— 6.8 
.5.9— 6 7 
7. — 8 2 
8.9—10.4 
6.8 - 7.1 

7.6— 8.2 
7 6- 8.2 
6.9— 7.4 
(i.7— 7.2 

6. — 6.3 

7.7— 8.2 

7. — 7.6 


29.3—32.5 

30.6—33.4 

29.7—31.3 

27.3—30. 

36.7—39.7 

42.9—45.3 

26.6 - 29.8 

35.7—37.2 

36.6—37.8 

32.9-35.3 

28.7—31.4 

36. —37.7 

30. - 39. 

21.8—24.9 


18.1 — 19.6 
17.9-19.7 
16. —18.4 
16 -17.8 
27.3—30.8 
30.8— .'!5 3 
19.9—22.4 
23.7—26.2 
22.8—25.7 
19.7-22.2 
19.1—20.9 
17.1—33.1 
25.6-28.7 
20.5—22.9 


(1) 
..38^ .(i3 

(2) 
.32— .74 

(3) 
.67—1.36 




(1) 
61— 80 


Norw.ty 




60- 85 
74 l-'O 


SAvedeu 




Austria 

Hungary 


2.06—2 .54 


248.73— 285. Ill 


64 170 


Switzerland... 








German Emp . 
Prussia 


.80-1.08 


121.57-159 24 


121 •>•>() 


Holland 

Belgium 

Spain 

Italy 


1 69—1.90 
5.05—8.43 
8.0.5-9.27 
1 46—1.61 




44 - 128 

2.5— 53 
130-212 


225.99—231.34 
65.12— 71.77 


France... 



(1) England, (2) Scotland, (3) Ireland. 



14 Social Science. 

Difficulties of Social Science. 

1. Great number and complexity of the phenomena. 

2. Lack of stability in the conditions governing social 
activities and in the forms of social organization. 

3. Difificulty of observation ; {a) observations must fre- 
quently cover a territory and include a number of 
instances too great for a single observer, {b) Those 
who alone know the facts are interested to conceal 
them. 

4. Impossibility of experiment. 

5. Liability of the investigator to the influence of pas- 
sion and prejudice. (See Spencer, Study of Soci- 
ology). 

Economics the Best Developed Among the Social Sci- 
ences. 

1. Has been longest and most carefully studied. 

2. Deals with activities least subject to the arbitrary 
action of free will. 

Importance of Economic .Science. 

Explains and thus teaches the conditions of successfully 
controlling the economic side of the life of social or- 
ganisms, on the healthy development and right order- 
ing of which depends the possibility of attaining the 
highest purposes of human life. 
Method of Study. 

I Development of economic life, particularly of the 
nations of western Europe and the United States. 

2. Description of the existing economic organization of 
these nations, and an analysis of its working. 

3. Consideration of the principal elements of strength 
and weakness in this organization, and of some of the 
more important proposals for regulating and changing 
it. 



LECTURES HI-IV. 



CONDITIONS (jOVERNINQ THE DEVELOPMENT OF ECONOMIC— 
ECONOniC LIFH OF SAVAGE AND BARBAROUS PEO= 
PLES AND OF NON=EUROPEAN CIVILIZATIONS. 

Influence of External Nature on Economic Develop- 
ment. 

Shaler N. S. Nature and Man in America. Chs. 
VI-VIII; introductory essay in Vol. IV of Winsor s 
Narrative and Critical History of America ; Chs. I -1 1 1 
on *rJie United States of America, ed. by him. Knies 
K. Politische Oekonomie voni gescJiichtlicJien Stand- 
pnncte II, i. Bartholomew J. G. Atlas of Com- 
mercial Geography (contains maps showing physical 
conditions of greatest economic importance). 

Influence of Race Characteristics. 
Knies K. As above, II, 2. 

Influence of Other Departments of Social Life. 

J^HiLLiPOViCH E. V. Grundriss d. PolitiscJien Oekono- 
mie. Bk. I. Marshall A. Principles of EconoDiics, 
Bk. I, Ch. II and III. Knies K. As above, II. 
3-5. Wagner A. Grnndlegnng dcr PolitiscJien Oekon- 
mie. Pt. I, § 1 50-1. Ashley W. J. An Introduction 
to English Economic History and Theory. Vol. I, §§ 
15-17, 20. Vol. II. §§ 63-65, 71. Cunningham W. 
Politics and Economics. Ch. II. Gnnvth of English 
Industry and Commerce. Vol. I, §§ 82-84. (Ashley 
and Cunningham bring out clearly the connection 
between economic organization and the prevailing relig- 
ion and ethical views.) 

Economic Life of Savage and Barbarous Peoples. 

Spencer H. Descriptive Sociology. Vols. Ill, VI, and 



1 6 Economic Life of Non-European Civilizations. 

first portion of Vols. I and VIII. Ratzel F. ]'"dlker- 
kiinde, 3 vols, (fully illustrated and with a few good 
maps bearing on economic life). Letourneau C. 
Sociology. Jolly N. Man before Metals. Tvlor E. 
B. AntJiropology. Taylor I. Origin of the Ayrans. 
Lubbock J. Prehistoric Times. Mason O. T. The 
Origins of Invejitions ; Woman's Share in Primitive 
Culture. Clodd E. The Story of Primitive Man 
(contains good brief bibliography). Starr F. Some 
Eirst Steps in Human Progress. Brinton D. G. (edi- 
tor) Iconographic Dictionary ; sees, on Anthropology, 
Ethnology and Prehistoric Areheeology by Brinton, on 
EtJinography by Gerland, and on History of Culture by 
von Eye and others, de Laveleye E. Primitive Prop- 
erty. Letourneau C. Property: Its Origin and De- 
velop))! ent. Wilson D. Prehisto)'ic Alan (U. S.) ' 

The reports of the U. S. Bureau of Ethnology and H. 
H. Bancroft's History of the Native Races of the 
Pacific States contain a great amount of information 
concerning the primitive races of the U. S. 

Economic Life of Non-European Civilizations. 

Spencer H. Descriptive Sociology. Vols, II (Mexico 
and Peru), VII (Hebrews and Phoenicians); Ico)io- 
gi-aphic Dictio)iary, as above (Art. on History of Cul- 
ture). Erman J. P. A. Life in Ancient Egypt. Mas- 
PERO G. C. C. Tlie Daw)i of Civilization ; Egyptian 
ArchcBlogy ; I^ife in Ancient Egypt and Assyria. Wil- 
kinson J. G. TJie Egyptians in the Tinies of the Phai'- 
aoJis ; Ma?ine)-s a)id Custo))is of the A)icie)it Egyptians, 
(two series of Essays, 3 vols. each). Simcox E. J. 
P')-imitive Civilization (Kgy^i, Babylon, China). Wal- 
lon H. a. Historic de P Esclavage dans T A)iti quite 
(introductory chapter). Menard R. La J^ie Privee des 
Ancicns (vol. on Le Travail dans I'Antiquite). Pres- 
COTT W. H. Conquest of Mexico ; Conquest of Pern 
(Prescott's accounts probably considerably exaggerated). 
Payne E. J. Histo)y of the Ne%v ]Vo)'ld called Amo'- 
ica Vol. I (Mexico). 



Conditions Governing Development of Economic Life. 17 

Conditions Governing the Development of Economic 
Life. 
The economic life of each people presents characteristic 
features which are the result of the special conditions 
in connection with which it has developed. The more 
important of these conditions are, i, the territory inhab- 
ited by the people in question ; 2, their race character- 
istics ; 3, the contemporaneous development in other 
departments of social life, especially {a) the industrial 
arts, dependent in turn on the development of physical 
science ; {b) social and political organization ; (r) law 
and custom, particularly property law; (^/) religious and 
ethical development. 

We shall trace in some detail the economic develop- 
ment of Western Europe and the United States. As 
an introduction to this it will be useful to look at the 
general features of economic life among peoples in 
a condition of savagery or barbarism, which may be 
taken as representing in the main an earlier stage in 
the development of European peoples. 

Economic Life of Savage Peoples. 

No people is supposed to have passed beyond the stage of savageiy 
earlier than in,(i()O-ir),O()0 B. C. Examples among existing peoples: 
Fuegians, Bushmen, Andaman Islanders, Veddahs, Australians, Tas- 
manians (recently extinct), Indians of Lower California. 

Desires : Of the simplest and coarsest nature ; both 
vegetable and animal food, the latter though gener- 
ally cooked, sometimes eaten raw ; immediate needs 
alone realized, saving being practically unknown, times 
of great want alternating with excessive supply ; life 
necessarily nomadic, houses being nothing more than 
natural shelters or constructions of the simplest and 
most temporary nature ; clothing either entirely lack- 
ing or of the simplest character, made of skins, bark 
of trees or leaves, and, except in the most northern 
climates regulated more by the sense of modesty or 
the desire for ornament than by the need of warmth. 

Productive Pozver: Hunting and fishing the principal 
means for gaining food, the only vegetable food being 



1 8 Economic Life of Barbaivjis Peoples. 

such roots and fruits as grow wild ; tools made from 
such objects as stones, pieces of wood, bones, shells 
and horns, which require the smallest amount of prep- 
aration, (the most complicated instrument in general 
use among savages is the bow and arrow. This was 
unknown to the Australians, but its place was taken by 
the boomerang), art of making, or at least using, fire 
universally known ; though great skill is shown in 
adopting and using their primitive instruments, pro- 
ductive power is extremely small, causing a small and 
scattered populaton. (Estimated that it takes 60 sq. 
miles to support a savage.) 

Social and Political Organization : It has been a quite 
generally accepted view that mankind has passed 
through a stage of promiscuity in sexual relations. In 
the light of the most recent investigations, however, 
it seems probable that among the lowest savages (as 
well as among the animals most nearly related to 
man) there exists between parents and offspring a 
union sufficiently permanent and exclusive to be 
regarded as a family. Among the lowest savages, 
indeed, the family seems to be the only form of 
social organization, the difficulty and methods of 
obtaining subsistence not admitting of any concentra- 
tion of population or encouraging combined action ; 
union of families in clans or tribes marks a stage of 
progress. 

Economic Organization and Property Rights : Family 
the economic unit ; no division of labor except 
between the sexes, the drudgery being assigned to 
the women, and consequently no exchange ; slavery 
impracticable; individual property confined to articles 
of personal use ; clans or tribes as they develop some- 
times acquire exclusive use of a given territory. 

Economic Life of Barbarous Peoples. 

Transition from savagery gradual and no definite divid- 
ing line possible, the most fundamental change involved 
being the development of agriculture and the domes- 
tication of animals. 



Economic Life of Barbarous Peoples. 19 

Kxamples of fully developed barbari.sm are to be found among the 
inhabitants of tiopical Africa, on some of the islands of the Pacific 
and Indian oceans, among the American Indians and the Mongolian 
lieopleH of Asia. The men of the bronze and iron ages in prehistoric 
Europe were in tliis stage of development. 

Desires : Marked development, as regards both quantity 
and quality of objects desired ; food more varied and 
better cooked ; a great increase in the importance of 
of vegetable goods among agricultural peoples ; shel- 
ter more effective and permanent ; clothing more 
suitable, cleanly and decorative ; desire for adornment 
in general much more varied in its objects ; realiza- 
tion of future needs begins to exercise an influence, 
surplus food being stored for future use. 

Productive Power: Tremendous increase due to agri- 
culture, yielding food trees, grains, vegetables and fibre 
plants ; domestication of animals (horned cattle, sheep, 
goat, horse, dog, fowl) ; substitution of metals (cop- 
per, bronze, iron,) for more primitive materials ; plait- 
ing and weaving of cloth, basketry and mats ; use of 
clay in pottery, making possible great improvements in 
cooking ; ofrinding of meal and makiuir of bread ; great 
improvements in boat construction, including the use 
of sails ; the more simple mechanical principles, such 
as the lever, simple pulley, and wedge, understood and 
skillfully applied. 

Social Organi::atio7i : E.xtension and strengthening of 
the clan and tribal organization, the territorial com- 
munity tending to take the place of the consanguine- 
ous clan and tribe ; custom rather than law the con- 
trolling force ; separation of social classes based on 
individual ability, conquest and birth ; slavery becomes 
general, maintained by war and sale of children, and 
rendered profitable by the changes in industry ; polyg- 
amy almost universally recognized (evident, however, 
that in practice polygamy must have been confined to 
the few and monogamy the usual form) ; father tends 
to not only become the head but the owner of the 
family ; settlements much more permanent, though 
life is still apt to be somewhat nomadic. 



20 EconoDiic Life of Barbarous Peoples. 

Eeonoinic Organirjation and Property Rights : I^'aniily 
still the economic unit, most im])ortant form of divis- 
ion of labor still being that between the sexes, though 
specialization of employments, especially among slaves, 
tends to increase ; exchange by means of regular mar- 
kets also begins, though it still plays a very minor 
part, and there are no commercial or industrial cities, 
production being in the main for family use ; aj^pear- 
ance of marked distinctions in wealth and of an 
economically idle class ; individual property still con- 
fined to articles of immediate consumption and per- 
sonal use, the dwelling being usually the property of 
the family, though communal dwellings are common 
in some localities ; land tends to fall into the possession 
of individual families, their right to it, however, being 
one of excluive use rather than of full property, and 
subject to important limitations in the interest of 
the community. 

Economic Life of Non-European Civilizations : (Egypt, 
Assyria, Babylonia, Persia, India, China, Carthage, 
Phoenicia, Palestine, Peru, Mexico). Although we 
know comparatively little of their economic organiza- 
tion and life, and they present important differences 
as between themselves, they have certain general 
features a statement of which will be valuable for 
purposes of comparison with pAiropean civilization : 
A marked advance over barbarism in quality and vari- 
ety of desires shown by improvement in their houses 
(brick and stone), in the character of their clothing, 
in the quality and variety of food and the methods of 
its preparation, and by the growth of the arts of arch- 
itecture and sculpture. The increase in productive 
power, though great, is due not so much to essential 
changes in industrial methods as in greater skill and 
improvements in existing instrum'ents (plow), in the 
larger and more intelligent use of resources (increased 
use of animal, wind and water power, construction of 
permanent irrigation systems), and, most of all, per- 
haps, in the capacity for combined labor ; population 



Econoviic Life of Non-Evropcan Civilisations. 21 

ceases to be nomadic ; the social and political organi- 
zation becomes more firmly fixed ; cities develop, 
implying a considerable surplus of agricultural pro- 
duce over and above the needs of cultivators ; divis- 
ion of occupations increases, but commercial exchange 
does not increase correspondingly (coined money 
unknown in Egypt at the height of its power, and in 
Peru), the reason being that labor is not "free labor ; 
generally a division of the population into, i, a com- 
paratively small governing class combinig civil, mil- 
itary and religious authority ; 2, the governed class, 
comprising the bulk of the population whose produc- 
tive power, above a more or less generous subsistence, 
is commanded by the governing class in the form of 
taxes or analogous payments ; cities not so much cen- 
ters of independent industry and commerce as resi- 
dences of members of the governing class and their 
dependents ; international trade very limited, being 
largely confined to caravans. 

The statements in i-egard to the subject condition of the bulk of the 
popuhition and the slight developnient of trade should, perhaps, b(^ 
considerably niodilied for the Chinese among modern nations, and, 
with respect to trade certainly, for the Phoenicians and Carthaginians, 
among ancient nations; commerce and manufactures were the foun- 
dation of their civilization ; they navigated the Mediterranean and col- 
onized its shores, went out into tlie Atlantic to England and the P.altic, 
and are even said to have sailed to India by the Red sea and to have 
passed around tlic Cape of Good Hope. 



LECTURE V. 



ECONOMIC LIFE OF GREECE. 

General. 

ScHoMANN G. F. TJic Atiqnitics of Greece. Boeckh 
A. The Public Economy of the Athenians. McCuL- 
LAGH W. T. Industrial History of Free Nations. 
Vol. I. Grant A. J. Greece in the Age of Pc? ides. 
Blumner H. The Home Life of the Ancient Greeks. 
GuHL E. and Koner W. Life of the Greeks and Ro- 
mans (does not give attention to industrial organization, 
but contains excellent descriptions of houses, food, cloth- 
ing, ornaments, etc). Smith W. Dictionary of Greek and 
* Roman Antiquities. Buchsenschutz B. Besitrj und 

Erwerb im griechischen AltertJiume ; Die Haupstddte 
des griecJiischen Geiverbefieisscs. MOller I. Handb. 
d. Klass Altcrtnms- WissenscJiaft. . Vol. IV. Die 
griechische Altertiimer 3 Die Privataltertfimer 8-12. 
Urumann W. Die Arbeiter u. Communisten in GriecJi- 
land u. Rom. Wachsmuth W. Die Stadt Athens. 
Meyer E. Die Wirtschaftliclic Entwickelung des 
Altcrtnms (Jahrb. f. Nationaloek. u. Stat. Series III, 
Vol. IX, p. 696), combats the view, usually, held that 
labor was almost exclusively slave labor, and produc- 
tion for exchange of comparatively little importance. 
Menard ; as in previous lecture. 

Population. 

Hume D. On the Popnlousncss of Ancient Nations (in 
his collected essays.) Meyer E. Bcvdlkcrungszvcscn 
{GescJi. d. Bcvolkerungsbewegnng ; Altcrtum), in Handb. 
d. Staatswissenschaften, Vol. II. 



Economic Life of Greece. 23 

Commerce. 

Lindsay W. S. History of ]\Ie reliant Shipping and 
Ancient Connnerce. Giijbins H deB. History of Coni- 
vierce in Europe. 

Slavery. 

Ingram J. K. History of Slavery (enlarged from arti- 
cle on slavery in Encyl. Britan. 9th ed.). Wallon (as 
in previous lecture). 

Land and People. 

Land: Good supply of wood, metals, stone and clay ; 
soil yielding good returns to labor (wheat, barley, 
grapes, olives, ligs); principal domestic animals (cat- 
tle, sheep, goats, swine, dog, horse, ass, mule and 
various kinds of fowl) ; climate not severe but demand- 
ing industry and stimulating energy ; surface diver- 
sified encouraging development and competition of 
independent centers of civilization ; situation favor- 
able for commerce and for contact with the older 
civilizations of Egypt and Asia. 

People : Branch of the Aryan race, which has always 
shown a marked capacity for political organization 
and early developed the monogamic family and clan 
based on the patria potestas. From the lack of devel- 
opment of physical science, however, industry could 
not pass beyond the handicrafts stage of development, 
and the contempt for labor due to the prevalence of 
slavery prevented the application of the best thought 
of the age to industrial matters. 

General Course of Development. 
I. Prehistoric period. 

(a) Pre-Hovieric : Traces of a civilization possibly con- 
temporary with that of Egypt marked by the ex- 
istence of cities. Of the economic life of this 
period we know nothing. 
{f) Homeric : Large landed estates cultivated by a 
dependent class comprising both agricultural la- 
borers and artisans; considerable degree of skill 



24 Econouiic Life of Greece. 

in working in cloth and metals and in ship build- 
ing ; city life of relatively small importance ; almost 
no commerce ; a small class of travelling artisans. 

2. Historic period. 

Two classes of States, {a) States which remained 
predominantly agricultural, apparently, however, with 
the substitution of small proprietors for the large land 
owners with dependent cultivators. To this class be- 
longed almost all the states of Greece proper ; Sparta 
the most important representative, {b) States which 
developed a vigorous city life and with it industry and 
commerce, succeeding the Phoenicians as the greatest 
commercial people of the civilized world. 

In the east the Greeks began to predominate over the Plioenicians as 
early as tlie eighth century B. 0. In the west Carthage remained tlie 
cliicf commercial power until her overthrow by Rome in tlie tliird 
century B. C. 

To this class belonged the cities near the Pelopone- 
sian isthmus (Corinth), and Athens, on the mainland, 
and the far more numerous cities on the islands of 
the Aegean and the coast of Asia Minor, with their 
colonies in Italy, Sicily and Thrace. 

Sparta and Athens: Features in common. 

1. The subordination of the individual to the state ; most 
marked in Sparta, but seen also at Athens in the 
magnificence and interest of public as compared with 
private life. 

2. The existence of a large serf class (Sparta), or slave 
class (Athens), and of a class of freemen without 
l)olitical rights to whom belonged the greater part of 
the industrial life of the community. 

Poiiulatiou of Sparta. 1. Spartans; full ci'izens, estimated at not over 
10,000 families. 2. Perioeci; tree land owning population without 
political rights, estimated to be three or four times as numerous as 
tlie Spartans. 3. Helots; serf population, cultivating the laud of the 
Spartans, estimated to be two or three times as numerous as the 
Perioeci. 

Population of Athens; (Attica) at outbreak of Peloponesian war: 
Citizens, 90,000. Metoeci : foreigners, industrial class, 4.5,000; slaves, 
36.5,000. These figures, quite generally accepted, have recently been 
severely criticised, Meyer's estimate being: Citizens and slaves, some- 
thing over 100,000 each. Metoeci, ;!0,O0O. 



Sparta and Athens. 25 

Sparta : Never attained to any considerable industrial devel- 
opment, the state doing all in its power to enfore a sim- 
ple manner of living and to discourage trade ; foreigners 
not allowed to settle in Sparta, nor Spartans to travel 
abroad without special permission ; industrial occupa- 
tions and even the possession of gold and silver forbid- 
den to Spartans (strictly enforced until the Peloponesian 
war); money for internal trade was iron, at first uncoined ; 
what industry (aside from agriculture) and commerce 
existed was in the hands of the Perioeci, who seem to 
have escaped many of the restrictions applicable to 
Spartans. 

Athens : Little known of the early development of economic 
life at Athens. At the time of Solon's legislation (594 

B. C.) there seems to have been a tendency towards the 
concentration of land in the hands of large owners at 
the expense of the small holders who were laboring 
under a heavy burden of debt. During the greater part 
of Athenian history, however, Athens seems to have 
been divided into comparatively small estates, and most 
of the citizens, who alone had the right, seem to have 
been landowners. By the end of the sixth century, B. 

C, city life had come to predominate, and the devasta- 
tions of the Peloponesian war gave a blow to agricul- 
ture from which it never recovered. 

Organizatioi of Industry : (\) production: While pro- 
duction within the household, by the women (spinning 
and weaving) and slaves, played a much more impor- 
tant part than it does to-day, production for the mar- 
ket attained a considerable development, resulting 
in many instances in production on a large scale 
(factories employing twenty to fifty, and, in one 
instance, one hundred and twenty laborers). While 
the greater part of the manual labor, and even the 
superintendence, was doubtless confined to slaves 
and freedmen, the citizen being merely the capitalist, 
citizens must also have been engaged in handicrafts to 
some extent. In mining, slave labor was employed on 



26 Athens. 

a large scale, and even the ownership of slaves, to be 
let out, was a source of great profit. In agriculture 
slaves probably performed the bulk of the labor, 
though the smaller owners may freqently have labored 
with their own hands. (2) Trade: Athens, not only 
invited to commerce by her situation but forced to it 
by the necessity of providing food for her population 
and raw materials for her industries, gradually became 
the emporium of the Greek world. 

From the northern countriea as far as the Pontus, came giain, salt lish, 
hemp, Ihix, wood, tar, pitch, wax and slaves, as well as eastern pro- 
ducts brought to the I'ontus by caravans; from Kgypt, giain, papyrus 
products, linen, salves and medicines; from Asia, manufactures, espec- 
ially line cloths and jewelry ; from the islands of the iEgean, metals, 
wine and marble; from Sicllj', grain and cheese. In return, Athens 
ex|)orted oil, ligs, lioney and manufactured articles, and performed a 
large part of the carrying trade 

(3) Money and BanktJig : Co'imgit, ^r'nt introduced by 
the Phoenicians, was regulated, at Athens especially, 
on sound principles, Athenian coins being everwhere 
recognized as standard. Silver was the standard 
metal, though Persian gold coins were also used. 
The principal branches of banking (deposits, trans- 
fers, loans), were practised. P^xtended use of bills 
of exchange seems doubtful, though orders on for- 
eign agents or debtors were not unknown The 
rates of interest was high, due apparently to risk ; 
12% low, 18% common, 20%-3o% on mercantile ven- 
tures. 

Rklation of the State to Pxoxomic Life. 

Although trade and the handicrafts were regarded as 
degrading and incompatible with the best citizenship, 
the importance of a right ordering of economic life was 
recognized ; efforts towards the equal division of land 
at Sparta ; Solon's restrictions on the ownership of 
land at Athens ; strict regulation of coinage at Athens ; 
strict laws, securing the enforcement of contracts and 
the rights of property ; encouragement to foreigners to 
settle in the country ; provision of market places, of a 
market police, and of special courts for the settlement 
of trade disputes. Freedom was the rule in trade mat- 



Results. 27 

ters, and such restrictions as existed {c. g. prohibition 
of exportation of grain from Athens ; requirement that 
loans should be made only on vessels bringing cargoes 
to Athens ; prohibition of the destruction of olive trees), 
were evidently in the interest of the comm'unity as a 
whole. There were no protective duties, in the modern 
sense, and no trade organizations corresponding to the 
mediaeval gilds. 

Propertv. 

Although in some states (Sparta, Crete,) there were im- 
portant restrictions upon the full right of individual 
property, as well as customs, which might imply an 
earlier, more or less, communistic system, the right of 
private property seems, during the historic period, to 
have been well developed, especially m the commercial 
states. 

Results. 

The commercial states alone achieved a considerable 
degree of wealth. In Athens the period following the 
Persian wars seems to have been a time of general pros- 
perity exemplified in the magnificence of public rather 
than of private life. The concentration of population 
in the city, the growth of slavery, the pauperization of 
the citizens by payments from the public treasury, and 
the opportunities for the accumulation of wealth in 
manufactures and commerce, in the mines, by the hiring 
out of slaves, and in the service of the state, especially 
in war, gradually produced, however, a population the 
bulk of whom, including slaves, had little more than the 
necessaries of life, while, together with a trading class 
(mostly foreigners) of considerable wealth, there were a 
few who had accumulated great wealth. 



LECTURES Vl-VII. 



ECONOMIC LIFE OF ROME. 

MoMMSEN T. History of Rome. Duruy V. History 
of Rome. (Each contains a good account of the econ- 
omic development of Rome. Mommsen does not go 
beyond the repubhc). Gibbon E. History of the 
Decline and Fall of the Roman Empire I, II, (shows the 
benefical effects of the estabhshment of the empire). 
GuizoT F. Lectures on the History of Civilization in 
France. Course I, Lect. II, and Course II, Lect. VII 
(gives some account of conditions during the later 
empire). Stephenson A. Public Lands and Agrariaii 
Laivs of the Roman Republic (in Johns Hopkins Uni- 
verity Studies, ninth series). Brown W. A. State 
Control of Industry in the Fourth Century (Pol. Science 
Quart. II). Ramsav W. A Manual of Roman Antiq- 
uities, edition of 1895, revised by Lanciani (contains 
chaps, on public lands and agrarian laws, revenues, coin- 
age, interest on money and agriculture). Bureau de 
LA Malle. Economic Politique des Romains (takes up 
money, population, agriculture, and financial adminis- 
tration. Antiquated, but still of some value). Voigt 
M . Die rom iscJicn A Itert timer ; Privat A Itertilmer ?ind 
KulturgescJiicJite in M tiller's Handb. d. Klass. Alter- 
tumswissenschaft. Vol. IV. Marouardt J. and Momm- 
sen T. Handb uch der rominishen Altertiimer (stand- 
ard ; very full on public economics, especially the finan- 
ciai system). Friedlander L. Darstelhmgen aus 
der SittengescJiicJite Roms. (deals with early empire and 
gives excellent picture of the life of the time, but does 
not touch much on industrial organization). Merkel 
J. Collegia (in the Handvvorterb. d. Staatswis.s). Liebe- 



Land and People. 29 

NAM W. Zur GeschicJite nnd Organisation des roniis- 
cJien Vereinsivesens. Wagner A. Finanzivisscnsehaft, 
Vol. Ill (summary of financial system). Schmoller 
G. Die HandelsgesellscJiaften des Altertuvis (Jahrb. 
fur Gesetzgeb. Verwalt. u. Volkswirths. im Deut. 
Reich XVI). Wallon, Smith, Meyer, Menard, 
Ingram, GinniNS, Lindsay and Drumann as in previ- 
ous lecture. Arnold W. T. The Roman System of 
Provincial Administration. Fustel de Coulanges. 
Le Domaine rnral chez les Romains (Revue des deux 
Mondes, (Vol. LXXVII) ; a careful review of the 
development of the rural economy of the Romans, hold- 
ing that the displacement of peasant holdings by large 
estates, during the later republic and early empire, has 
been exaggerated. 



Importance : 

Civilizations or the ancient world merged in that of 
Rome which from an economic standpoint is the most 
important and best known of all. * It affords an excel- 
lent illustration of the close connection between eco- 
nomic, political and social development. 

Land and People : 

Land : Rome, situated on low hills not healthy until 
drained, but then favorable to agriculture. 

F^vidences of an extensive system of under ground 
drainage of portions of the Campagna even in pre- 
Roman times : the great Cloaca Maxima, still in use, 
attributed to Tarquin. 

Grain {spelt, the most common form), vegetables, 
the vine, and the fig seem to have been cultivated in 
the earliest time, and the olive towards the end of the 
royal period ; principal domestic animals also known 
and used for both food and draught purposes. The 
country was poor in metals, but afforded lime, -clay, 
salt, and coarse building stone. The situation on the 
Tiber was favorable for commerce. People : Aryans, 



30 First Period. 

closely allied to the Greeks with same general char- 
acteristics but with a still more firmly developed and 
vigorous family life based on the patria potestas. 

Periods of Development : 

1. From founding of t/ic city to tJic middle of tit e fourth 
century B. C. : period of internal development. 

2. From middle of fourth century B. C. to the esta/>- 
lishment of the Empire : period of war and territo- 
rial expansion. 

3. Imperial period : Rome a world state. 

Period I : 

Roman territory probably did not exceed 500 sq. miles. 
Agriculture was the predominant industry, the popula- 
tion being principally made up of small peasant farmers. 
(Mommsen estimates the average holding at \2\ acres 
at the time of the Servian constitution). The popula- 
tion seems, during the royal period, to have been divided 
into three main classes, i, Citizens. 2, Clients, a 
class of dependent cultivators. 3, Non-citizen freemen, 
capable of hoFding land but without political rights ; class 
I becoming later the Patrician class, 2 and 3 coalescing to 
form the Plebeians. Slaves, though not unknown, seem 
to have been relatively few. The political and economic 
unit was the family, comprising all subject to the patria 
potestas. There is early evidence that articles from 
other parts of Italy and, even, Greece, Egypt, and Baby- 
lonia were used at Rome, but that trade did not reach 
any considerable development is proved by the fact 
that, though copper early passed as money by weight, 
and in the form of bars in the time of Servius Tullius, 
it was not coined until about the time of the Decemvirs 
at which time fines were still reckoned in cattle, and 
silver was not coined until 269 B. C. 

Tradition ascribes to Numa the collegiate organization 
of certain handicrafts (goldsmiths, coppersmiths, car- 
penters, fullers, dyers, potters, and shoemakers), and it 
is probable that there was a distinct artisan class in the 
city, but the weight of evidence would indicate that it 



Second Period. 3 1 

was of minor importance. While this description ap- 
plies in the main to the whole period under considera- 
tion there is evidence, during the later centuries, of i, 
growth of large estates, due princii)ally to the occupa- 
tion and leasing t)f the public lands, which were confined 
apparently to patricians, or at least to the wealthy ; 2, 
heavy indebtedness of the small boklei-s ; 3, an increase 
of slave labor. 

This state of affairs resulted in constant agitation and 
some legislation looking to the distribution of the j)ub- 
lic domain in small parcels to the common people, and 
to relief from debt. 

'I'lic most iTiiiKii'tnnt of tliusc l;i\vs was tlic Lex Licinia .K;? 15. C. 
wiiich juoviilcd tliat 1, iiilere'st already paid should be deducted from 
the luniciiial of the debt, and llie remainder pai.l in Ihiee annual in 
slallnients; 2, no one should oeeuiiy more tlian 5(10 jugeia (300 acres) 
of the jiulilie lands; 3, a certain number of freemen shoidd be em- 
l)loyed on every estate; 4, no one should send out more than loo 
largci' or 500 smaller cattle to j^raze on tlie public pastures. 

Pi'.Kion II : 

Almost constant war, carried on during the first hun- 
dred years in Italy itself, and resulting in the consolida- 
tion of Italy under Roman control ; thereafter, with the 
exception of the second Punic war and the civil dissen- 
sions of the last century, throughout the known woild. 
Such conditions, bringing Rome into contact with east- 
ern civilizations and making her the commercial as well 
as the political center of the world, necessarily pro- 
duced fundamental changes in her economic life. The 
main changes to note are, 

I. 'J7ic disapfcarancc of the peasant class due to {a) the 
long continued wars in Italy, (/;) the demand for men 
-for service in the army, (c) the nnportation of grain 
from the pi^ovinces, which, being obtained by way of 
tribute or taxation, could not only be sold at a price 
less than that of the Italian product, but came to be 
sold by the state at less than cost and finally to 
be given away. 

Knsuring a sutlicient sujiply of grain for the city luid long been re- 
garded as a public obligation. As early as 200 li. C. grain obtained 
from the provinces had been furnislied at very low prices. Under 



Second Period. 



Ciius Gracchus (tribune 123-2 I?. C.) provision was made for the sale 
to each burgess wlio presentbd hiinsell: in the city of 1 1-4 bushels ol 
grain, ea(;li month, at about one-half of the then prevailing market 
price. Tliis custom, somewhat modified, was sto)ii>ed by Sulla, but re- 
newed, 78 B. C, and restored in its oiiginal form (io B. C. ]>istribution 
was made free, 51S U. C. The number of recipieiits reduced by Ciesar 
from ;WO,(100 to 150,0(Ki, increased to tlie former amount by the end of 
the century, to be again reduced by Augustus, who re(|uii(.d a small 
payment from all except the destitute. 

{d) the undermining of industi-ial habits among the 
mass of the people as a result of long continued military 
service in wars of conquest, and the rapid growth of 
slave labor, bringing free labor into contempt. 

Peasant cultivation endured longest in the case of 
market gardens in the neighborhood of cities. 

Many attempts were made, by distribution of the public domain, to 
reestablish the peasant class. In addition to the establislimeut of col- 
onies (of which, according to Stephenson, there were fifty-one estab- 
lished, between 367 B. C. and 133 B. C. comprising 48,800 colonists, with 
at-signmeuls of from 2 to 6 jugera each, occupying a territory of 2."),3Glsq. 
miles) there w'cre general distributions of land in 338 B.C., 28(5 B.C. (prob- 
ably), 232 B. C, 200 B. C , (to Scipio's soldiers) 172 B. U., and 144 B. C. 
The agrarian law of Tiberius Gracchus (13,5 B. C.) provided 1, that no 
one should occupy more than .^00 jugera of the public domain; 2, that 
the land obtained by the conliscatiou of the surplus over that amount 
shoald be assigned in parcels of 30 jugera each, such assignments to 
be used for agi icultural purposes, to be inalienable, and to be charged 
with a moderate rent to the state. The distribution was designed to be 
continuous, but was practically suspended in 12t) B. C (Mommsen at- 
tributes to tids law considerable results cxi)laiuing by this mean.s an 
increase of 76.000 iu the number of burgesses with property sullicient 
to qualify them for service in the army) ; revived by Caius Gra'Chus 
(tribune 123-2 B. C), it was soon nullified by laws 1, abolishing rent 
l)ayments and the condition of inalienability for those who had re- 
ceived allotments; 2, discontinuing allotments; 3, jji'oviding that do- 
main lands should henceforth be rented and the proceeds distributed 
among the people. Sulla is said to have made 120,000 allotments to his 
soliliers. Civsar when consul secured the passage of a law making al- 
lotments of 30 jugera each to heads of families with three or more 
children. Twenty thousand families are supposed to have shared in 
this distribution, which was apparently made by means otlandstaken 
from small cultivators renting from the state. After his defeat of 
Poinpey, Ca'»ar made large distributions of land to his soldiers (num- 
ber of allotments sometimes estimated as high as 100,000), the land to 
be inalienable for 20 years. Large distributions to soldiers were sub- 
sequently made by Antony and the second triumvirate. The policy of 
assigning small holdings, which, since the time of the Gnechi, was 
based largely on contis(;at.on, and had in view the reward of military 
service, was not fitted to establish a class of successful farmers, and 
was hence powerless to counteract the Influences mentioned above 
which were constantly tending to the destruction of the peasant class. 

2. The Grozvth of a class of large landed proprietors 
working their estates by means of slaves (war fur- 



Second Period. 33 

nishing an unlimited supply), substituting grazing 
and the finer kinds of agriculture for the growing of 
grain, and ultimately withdrawing large quantities of 
land from i)roductive use altogether and converting it 
into villas and [larks. The estates spread throughout 
the Roman •dominion, the largest being outside of 
Italy. 

The province of No. Africa was said to be owned, in Nero's time, by 
six great proi)rietor8. Seneca spealis of grazing lands eijual to prov- 
inces and Idngdonis in extent. "With its tliousands oi slaves and 
freednicn of all nations, a great estate constituted a small, and to some 
extent self-sullicient, state," (Friedlander 1, 206), the slaves not only 
cultivating tlie estate, but also producing a considciable portion of the 
products of mechanical industry now obtained by purclia^e, and serving 
even as teachers, doctors, musicians, architects, etc. As an indication, 
perhaps exaggerated, of the increase of slavery, the following ligures 
may be noted (Ingram, 137). 150,000 captives were sold as tlie result of 
the victory of Kniilius I'aulua in Kpirus. The same number of prison- 
ers were taken at' Aquju Sextijc Cicsar sold on a single occasion in 
Gaul, 03,0(10 captives, and 1)7,000 slaves were acquired by the Jewisli 
war. 

3. TreDieiidons iucrease of wealth i)i the hands of a feiv ; 
rise of a moneyed aristocracy in the equestrian order ; 
distinction of rich and poor tends to supersede all oth- 
ers, and the conti'ol of the state falls into the hands of 
the wealthy. Mommsen (IV, XI,) gives as the main 
sources of income, i, rents of the soil of almost all 
Italy and the best portions of the provincial territory ; 
2, interest on capital ; 3, gains from commerce ; 4, 
profits of farming the revenues ; to which might be 
added the income from slaves and freedmen employed 
in the industrial arts, and in the construction of pub- 
lic works, (about the middle of the second century, 
B. C, $10,000,000 was expended in three years on the 
Marcian aqueduct, and the public buildings ei-ected 
during Caesar's control cost $8,000,000) ; the income 
from war and confiscations, and the exactions prac- 
ticed by the officials of the provinces. 

I'he very wealthy class was doubtless small in number; said, 10-4 B.C., 
that there were not more than 2,000 wealthy families in Rome, lliough 
the numbers probably increased during the later republic and eaily 
empire. The following will illustrate the importance of war as a 
source of revenue. A Jewish priiu^e paiil Roman olliciala for their 
support $1,200,000, of which $.i()il,()0) went to l'omi)ey. Another small 
ruler bought independence by paying I'ompey ;?l,iiOO,000. Ariobazarncs 



34 Second P CI iod. 



olCappailocia i)ai(i I'ompcy $33,000 a month. A king of Egypt paiilCtcsar 
$6,0110,000, an<i later, to Uabinius, i>ro-ronsiil of Syria, .■?10,(i0O,0O0. Cras- 
S118 was 8ai(l 10 liavc taken $10,0(lo,(iiiO from tlic temple at -Iciusalen^and 
Cai>io $1.1,000,000 from tlie temple at Tolosa. C;vsar brought back 80 
n)uch gold, as the result of his Gallic war?, that its value fell -i.");; as 
measured in silver. Measured in money, however, foituucs were not 
.so large as at the present time (exact comparisons between the value 
of money now and then impossible; probable that it was somewhat 
greater then). In the latter part of the se(;ond century, B. C, $l;iO,000 
was regarded as a moderate senatorial, $100,000 as a decent ecjucstrian 
fortune; itroperty of the wealthiest man at that time estimated at 
$.1,000,000. Fortunes later increased in size; Pomiiey, $3,500,000; ^Eso- 
pus (actor), $1,000,000; Crassus, $s,.iOO,000. The wealthiest Romans of 
whom we have record (early empire), one of tlieni a Ireedman. were 
worth $1.1,000,000 to $l(i,000,000 each. 

i\. Luxury and extravagance, the outgrowth of contact 
with ea.stern ci\'i]izations, jDrobably surpas.sing in some 
directions (country estates, food, personal service, 
expenditure to secure political preferment) anything 
which has existed since. Extravagance and luxury 
seem to have been out of proportion to the amount of 
wealth, judged even by the standaixl of to-day. Sev- 
eral causes might have contributed to this ; luxury in 
personal service explained b)' the abundance of slaves; 
the manner in which wealth was acquired, and the 
limited oj^portunity for productive industrial invest- 
ment, restricted the desire to save and encouraged 
lavish expenditure. The modern conception of wealth 
as an industrial agent played a very subordinate j^art 
in Roman life. 

The results of extravagance arc shown in the enormous debts of lead 
ing men. Ca-sar (62 B. C), after deducting his assets, owed $1,000,000: 
Antony, at the age of 24, owed $300,000, and fourteen yearslater, $-2,000,- 
000; others owed $3,00o,ooo ami $3,.i00,ooo. Debt crises, which from 
their importance, must have involved the wealthy members of the com- 
munity, were of constant occurrence. 

5. Orgatiization of industry. As in Greece, hand labor 
and industry on a small scale were held in contempt ; 
senators, excluded from trade and farming the reve- 
nues, were forced to become land owners. While 
citizens of small means must have engaged to a cer- 
tain extent in the handicrafts and retail trade (the two 
frequently combined), the great bulk of industry was 
carried on by slaves for the account of their masters 
(a single individual frequentl)M)wned several thousand 



Second Period. 3^ 

slaves), or by freedmen dividing their gains with their 
former masters, or worlving on their own account. 
Even the higher branches and management of indus- 
try (architects, bankers, etc.) belonged for the most 
part to these classes, and individuals among them, 
[tarticularly freedmen, frequently obtained great 
wealth. Progress of industry was shown in the con- 
stantly increasing division of occupations (workers in 
precious metals, wood, leather, etc., divided into a great 
number of minor trades). Capacity I'or large under- 
takings is evident from the great public works, mining, 
quarrying and the making of bricks. Banking, credit 
operations, and commerce were all highly developed. 
Associations of capitalists for large undertakings 
(farming revenues, public works, etc.), are known to 
have existed, but there are indications that they were 
temporary associations for special purposes. 

In building Uie Marcian ar(iiie(luct Uie governient made a contract 
with 3,000 master Ijuildcrn each with his band of slaves. SchmoUer inti- 
mates that these associations developed into stock companies, with 
tran8leral)k' sliares dealt in on tlie market. lie ildriks also that tliey 
became great permanent companies, forming in many instances a de 
facto part of the government, and rivalling tlic governmentitself in tlie 
number of odicers and laborers. * 

6. The City: cosmopolitan in character, with houses 
several stories high, but streets so narrow that their 
use by carts was confined to the night time, contain- 
ing a population estimated at from 800,000 to 1,500,- 
000, composed principally of the poorer citizens, for- 
eigners, slaves and freedmen, the poorer portion of 
the citizens wretchedly housed, the citizens largely 
an idle class dependent on the public distributions of 
grain, unfitted for industry by generations of warfare 
in foreign countries and the predominance of slave 
labor. Rome was not so much an industrial center 
as the home of the worst elements of the population 
of the empire, supported by the tribute of conquered 
nations. " There has never, perhajxs, existed a great 
city so thoroughly destitute of the means of support 
as Rome." (Mommsen V, XI, 596). 



36 Third Pci iod. 

y. ComiHcrcc : almost entirely composed of imports, 
representing the tribute of provinces and the exploi- 
tations of governors, farmers of the revenue, mer- 
chants, land owners, and money lenders. The only im- 
portant exports were wine and oil. 

Pkkioi) III : 

Meyer estimatefl tlie i)i>i)iilation of the Roman Einjiire U A. P., as fol- 
lows (000,000 omitted) : Spain (i, Gaul 5, Daniil)e provinces 2 Africa, 
(i, Sicily .(!, Sardinia and Corsica .5, Italy 6, Asia 17-l.S, Eprypt 8, Greece 
:!, Oyrenaica .5. Total 5"). Meyer's estimate is much below that com- 
monly f^iven. Gi))l)on (f, II) estimates 120,000,000. Ingjrani (4:!) ([uotes 
approvingly for Italy, in time of Claudius, Blair's estimate of (i,!J44,000 
freemen and 20,832,000 slaves. 

First effects of establisJnneiit of empire beneficial . I . 
l'2mpire put an end to a long period of civil war and es- 
tablished peace and an orderly government thrt)ughout 
the civilized world. During the first two centuries of 
the empire there was a marked improvement in admin- 
istration. The system of taxation was reorganized, the 
direct taxes, for the most part, taken out of the hands 
of the farmers of the revenue (this reform accomplished 
by CaDsar), and the exactions of this class and the pro- 
vincial magistrates much restricted. 2. The extension 
of the empire meant in many instances the introduction 
of improved industrial methods, the extension of the 
industrial area of the world, and the development of 
commerce. 3. A wonderful system of roads extending 
throughout the empire. 

Friedliinder says there was as much travelling by laud as at any time 
up to the introduction of railways. There were inns, mai)s giving di- 
rections, flistances and stopping places, wagons for travelling by night, 
a state postal service, probably, however, not available for private in- 
dividuals. The ordinary long distance rate of travelling for the state 
post was 4 1-2 miles per hour including all stops. Civsar went from 
Rome to ihc Rhone (733 miles) in eight days. 

llie Fiindauiental Weakness of Rome : The fact that 
her economic life was based on slavery and the trib- 
ute of conquered peoples was bound in the end to 
outweigh all advantages Conquests necessarily came 
to an end, and territories already conquered began to 
fall away, while the lack of a sound industrial system 
led to exhaustion of existing resources. With the 



Agriculture. 37 

failure of fresh sources of supply, the number of 
slaves diminished. Public expenditures increased, es- 
pecially after the. second century, as a result of less 
efficient administration, defensive wars, and increas- 
ing extravagance at court. Diminishing productive 
power, combined with increasing expenditures, led to 
a rapidly increasing burden of taxation. The point 
was finally reached where people preferred to abandon 
industry rather than pay the taxes imposed, and the 
state was compelled in self-defence to render compul- 
sory the labor requisite to provide the necessaries of 
life to the people and the government, as well as the 
offices of those magistrates responsible for the taxes. 
This course of development involved 
Fundanicutal changes in the organization of industry. 

1. Agriculture. The difficulty of obtaining slaves, 
and the inefficiency of slave labor, led to the substitu- 
tion of tenants for slaves. Two systems came to pre- 
dominate, both giving the cultivator an hereditary 
claim to his holding ; {a) occupier personally free, 
right to holding transferable, but forfeitable for non- 
payment of rent ; this system (emsphyteusis) found 
principally on lands of civil and religious communi- 
ties ; {b) occupiers (coloni) bound to the soil; this 
system again assumed two forms ; ( i ) as applied to 
individuals on private estates ; (2) as applied to a 
group of people on the land of the state. 

It is not meant 10 imply that the^e were the only classea of af?ricul- 
tural laborers, but merely that they tended to take the place of slave 
labor, which, however, still continued to some extent. For an enumer- 
ation of aarricultural workers, see Guizot; Lectuies on the Hist, of 
of Civilization in France, Cour^e I, Lect. 11; for discussion of position 
of coloni, ibid., Course II, Lect. A' 11. Also Fustel de C'oulanges. 

2. Industry and coniniercc. Most significant is the 
development of {a) a class of free as opposed to 
slave artisans and traders ; {b) the collegiate, or gild, 
organization of indu.stry, used by the state for the 
enforcement of compulsory labor. 

The trade gilds attributed to Numa have already been mentioned. All 
through Roman history collegia, for agreat vaiiety of purposes (indus- 
trial, relii-'ious, social, for securing a suitable burial, etc.), seem to have 



38 Orgatiizatioii of Industries. 

lieeu romiiion. During the perioti of the civil wars they seem to have 
used for political intrigues, and large numbers were 8uppres=<ecl. By 
laws of the early empire, collegia could be legally organized only by 
consent of the senate, the emperor, or both. This attitude of hostility 
and repression gradually gave way to one of encouragement by grant 
of special privileges, especially to those engaged in service of public 
importance, such as bringing provisions to Rome. (Se|itimus Severns 
added distribution of oil to that of grain; Aurelian added pork and 
substituted bread for grain, mutton and beef were apparently added 
later, and even wine was sold at '4 less than the market price.) Dur- 
ing the latter part of the second and the third centuries the collegiate 
organization was rapidly extemled, and, when grants or privileges 
failed to secure sufficient service, membership and service were made 
compulsory and hereditary. This lesult was reached by the fourth 
century. 

Brown divides indu.strie.s, and con.sequently tlie col- 
legia, as follows, on the basis of their relation to the 
state : 

i.Indiistrics carried on by ihc State : Mines and quar- 
ries (work done principally by slaves and criminals), 
shell fisheries (for purple dye), mints, weapon facto- 
ries, cloth factories, dye shops, manufacturers of the 
precious metals, of wagons for the state transport 
service, transport service for collecting raw materials 
and distributing products, construction of public 
works (principally by slaves), sui:)ply of food to the 
capitals, minor services connected with the supply of 
the army, fuel for public baths, etc. 
2. All other industries; subject to heavy taxation ; as re- 
gards liability to state service, they may be divided into 
three classes : {ei) those exempt from service, includ- 
ing, besides the learned professions, some thirty-five 
or thirty-six trades specially exempted by Constantine 
(largely those engaged in the manufacture of articles 
of luxury) ; (b) those subject to honorable services 
(collection of taxes, management of city finances, 
oversight of water supply, streets, harbors, sale of 
food, etc.) ; (r) those subject to menial services (sup- 
ply of materials, assistance in various kinds of labor, 
etc.) All were subject to strictest regulation by the 
state; indi^■iduals could be compelled to enter the 
collegia for which they were fitted, and could not 
leave unless they provided a substitute. Member- 



ludividualism. 39 

ship was hereditary; The obHgation extended even 
to property, land which had once belonged to a mem- 
ber carrying with it the obligation of membership, or 
at least financial obligations for all future owners. 

" In the t'oiirtli century ii man's position was no longer ileternuned by 
lii« own free choice, hut was already llxed tor him by the conditions ot 
his birth. This was true in all departments of life. The son of a sen- 
ator or curialis stepped alike into the honors and the duties of his fath- 
er's position. The son of a soldier was forced to enter the army, and 
the colon carried on the cultivation ot the land tilled by his father. So 
in the field of industry. The workmen in the state manufactories were 
bound to their position for life, and when they died their places 
were taken ))y their sons. Nor were the members of the so-CHlled 
"free" colleges of workmen— tlie architects, liuilders, locksmiths, 
stone cutters, brass-workmen, wood-carvers, potters, etc.— any less 
closely bound down. If any one of them deserted his work he was 
sought out, even to the remotest provinces, and dragged ruthlessly 
back to his post. In all departments of industry the iron liand of Uie 
state was felt, assigning to each workman his special task and forcing 
Its accomplishment." (Brown 494-5.) 

State regulation of prices would seem to be a neces- 
sary concomitant of such system, and we have evi- 
dence that it was attempted on a large scale, but 
concerning its details and workings we know little. 

Uf.velopment of Individual Rights and Property. 

In the earliest period of Rome, property rights, appar- 
ently, centered in the family (and in the father as the 
head of the family) rather than in the individual ; not 
only did the wife and children have no separate prop- 
erty rights of their own, but they were themselves the 
property of the father, who, however, stood to the fam- 
ily estate in a relation of administrator rather than pro- 
prietor, being under obligations to maintain it and 
transmit to his successor as the representative of the 
family. 

Throughout the historical development of Rt)man 
law there was a tendency towards the breaking up of 
the family as a legal and economic unit, its place being 
taken by the individual person and individual property. 
The wife and the children, as well as the father, could 
each have their individual property, and the property 
right had been extended so as to include they//.i- ntcndi, 
\.\\^ jus frncndi and the jus abutendi. 



40 Individiialisui. 

Accompanying the growth of individualism, constitut- 
ing in fact another side of the same development, was 
the substitution of contract for status in determining 
the relations of individuals to each other and to so- 
ciety. This tendency was, as we have seen, arrested as 
a result of the necessities of the later empire. 

An outline of the (leve)oi)nient of individualism and private ])roperty 
may Ije obtained from W. C. Morey's Outlives of Roman Lair pp. .5, fi, 
■21--24, 33-39, 74-80, l.il>-152, •239-.i42, 247-249, 280-283, 313-315. See also Sii' 
Henrv Maine's Ancient Law. 



NOTE. 

ON THE GENERAL COURSE OF POLITICAL DEVELOPMENT 
IN EUROPE SINCE THE ROMAN EHPIRE. 

GuizOT F. Lectures on the History of Civilization in 
Europe (espec. lectures IV, VII, XI) gives a good 
brief account of the course of development. Ram- 
baud A. Histoire de la Civilisation Frani;aise and 
Lacombe p. The GrozvtJi of a People (brief) give a 
good account of the course of development in France. 
For Mediaeval period ; Emerton E. Mediceval En- 
rope (Chs. XIV, XV, XII). Adams G. B. Civiliza- 
tion during the Middle Ages {C\\<,. IX, XII-XIV). 
GuizoT F. Lectures on the LListory of Civilization 
in France. (Course I, Lects. XXIV-XXV, Course 
II, Lects. II, VIII-XI). Hallam H. Vieiv of the 
State of Europe during the Middle Ages. Duruv 
\\ History of the Middle Ages. City, Medieoval, 
in Art. on City in Palgravcs Diet, of Pol. Ec. A 
ofood idea of the extreme decentralization and subse- 
quent consolidation of political power in F^urope may 
be derived from the maps of Proysen's Historische 

Handatlas. 

* 
Period of Transition. 

The Roman P^mpire was permanently divided into two 
parts (Eastern and Western Empires) by the end of 
the fourth century. The Western Empire rapidly 
broke up as the result of internal weakness and barba- 
rian invasions. There followed four or five centuries in 
which, with few exceptions of slight duration (Empire 
of Charlemagne), we can trace no general or well-de- 
fined system of political or social organization, the most 
striking fact being the disappearance of the Roman 
system with its chief element, town life, which becomes 
of very slight importance. Out of this period of confu- 
sion gradually developed the feudal system which by 
the tenth century had, probably, become the predomi- 



42 Feudalism ; Cities. 

nant form of social and political organization through- 
out Western Europe. 

Feudalism, its Chief Characteristics. 

I. Hierarchical gradation of ranks based on a personal 
obligation of service from each lower to each higher, 
and of protection from each higher to each lower; 
usually connected with the holding of land. At the 
head stood the king ; under his protection, holding 
land from him, and owing services to him were the 
chief lords ; below these there might be lords of 
lower rank having the same relation to the chief lords 
that the chief lords bore to the king, and so on until 
we reach the actual cultivators of the soil. The im- 
portant point to notice is that it is only the chief 
lords who are under direct obligations to the king. 

2 The union of political autJiority and property in land ; 
each lord exercises administrative and judicial au- 
thority over the inhabitants of his own estate. 

3. Extreme decentralisation ; the kings are unable to 
exercise authority over the chief lords, who assume 
and exercise sovereign powers and thus establish a 
great number of petty, independent, political units. 
Guizot gives a list of twenty-nine practically inde- 
pendent principalities in France at the end of the 
ninth century and fifty-five at the end of the tenth 
century. 

4. Cnstojn and status, as opposed to legislation and 
contract, the controlling conditions. 

Rise of Cities. 

The establishment of a system of public order, how- 
ever imperfect, naturally led to the revival of town life 
and of commerce. The development of a vigorous city 
life, securing independence of the feudal organization, 
began in Italy as early as the eleventh centur)- 
and during the fourteenth and fifteenth centuries was 
the predominant element in the life of Western Eu- 
rope. National governments not having as yet devel- 
oped the cities were to a large extent sovereign com- 



Modern Xations. 43 

munities, maintaining" their own militia, making war 
and treaties (with slight reference to national bound- 
aries), levying taxes, administering justice, and coining 
money. The great city leagues, notably the Lombard 
League, headed by Milan (defeated the Emperor Fred- 
erick Barbarossa 11 76), and the Hanseatic League, 
headed by Lubeck, Bremen and Hamburg, and com- 
prising some ninety cities, mostly in northern Germany 
(defeated Waldemar of Denmark 1369), were among 
the foremost military powers of their times. 

Rise of Modern Nations. 

During the fifteenth century the growth of royal power 
began to make itself felt in the consolidation of local 
units into national wholes, and in the following century 
the national states of Europe assumed definite shape. 
The seventeenth and eighteenth centuries were marked 
by an almost continuous struggle between these states, 
both in Europe, and the new world opened up by the 
geographical discoveries of the fifteenth and succeed- 
ing centuries. At the end of the eighteenth century 
came a revolutionary movement which cesulted in the 
overthrow or limitation of royal power and the substi- 
tution of constitutional government, tending to democ- 
racy, together with a tendency towards restricting the 
field of governmental regulation and giving larger scope 
for individual liberty. 

This outline, applying- to Europe in general, needs modilication lor 
particular countries. In England the course of development has been 
much more even and gradual than on the continent, no single princi- 
ple of organization ever becoming so predominant. The revolution 
which was accomplished in a lew years in France, at the end of the 
last century, to be subsequently partly undone, has been going on in 
England with varying acceleration ever since the seventeenth cen- 
tury. The growth of a vigoious state life did not make itself felt in 
Prussia and Austria until the eighteenth century, and in Germany, as 
a whole, and in Italy, not until our own day. 

It is important, too, to notice briefly tlie broader relations of this polit- 
ical development. The growth of cities and commerce was intimately 
related to the Crusades. Tlie growth of state life was one jjhase of 
that general awakening and extension of European life which began 
at the end of the fifteenth century, other pliases of whicli a'e to be 
seen in the geographical discoveries, the invention of the mariner's 
compass, gunpowder, and printing, the revival of learning, and the 
rise of protestantisni. 



LECTURE Vlll. 



ECONOniC LIFE UNDER FEUDALISM. THE ECONOMIC OR= 
QANIZATION OF THE MANOR. 

England. 

Maps showing forest and fen areas of early England 
may be found in J. R. Green's Making of England. 
Ashley W. J. A71 Introduction to English Econoviic 
History and Theory. 2 Vols., covers the mediaeval pe- 
riod ; Manor, in Diet, of Eng. Hist. Cunningham W. 
Groivth of EnglisJi Industry and Couinicrcc. 2 Vols. 
(Vol. I. Early and Middle Ages). Cunningham W. 
and McArthur E. A. Outlines of English Industrial 
History. Rogers J. E. T. Six Centuries of Work and 
Wages; History of Agrieulture and Priees, Vols. I, IV, 
V. (In addition to the subjects noted in tho title 
Rogers discusses such questions as to the distribution 
of wealth, trade and markets, taxes, currency, weights 
and measures, cost of transportation, purchasing power 
of wages, profits of agriculture, etc.). Traill H. D. 
(editor) Social Etigland, Vols. I. II. Gibbins H. de B. 
Industrial History of England (contains map showing 
the distribution of population at the time of Domesday 
Survey). Andrews C. M. The Old English Manor. 
Seebohm F. The EnglisJi Village Community (con- 
tains maps showing the distribution, of lands on a 
manor, and the distribution of different classes of the 
population at the time of the Domesday Survey). Vi- 
NOGRADOFF P. ]^illaina^e in Euo-land ^ x^^Y^Y.. On the 
Agricultural Community of the Middle Ages and In- 
closures of the sixteenth century in England. Gomme 
G. L. The Ullage Community (Chs. VIII, IX). 
Garnier R. M. History of the English Landed Interests, 
Vol. I.; Annals of the British l^easantry. Nicholson 
J. S. Principles of Political Economy., Bk. II. Chs. 



Bibliogmpliy : Manor. 45 

VI-VIII (a good brief discussion, showing analogies in 
other countries, economic significance of feudalism and 
causes of its decay). Maitland F. W. The History 
of a Cambridgeshire Manor {Eng. Hist. Rev. IX, 417) 
Fowler W. W. Stndy of a Typical Mediceval Village 
{Quart. Jour. Ecs. IX, 151. map). Cheyney E. P. The 
MedicBval Manor {Annals of the Avier. Acad. IV. 275.) 
Translation of an extent showing holdings and services 
on the Manor of Borley, 1308). v. Ochenkowski W. 
Ejigland' s ivirthscliaftliehe Entwickelung ini Ausgaiige 
des Mittelalters. Among general histories J. R. 
Green's Short History of the English People gives 
considerable attention to economic matters. 

1-'kance. 

GuizoT and R.vmhaud, as in preceding Note. Lam- 
PRECHT K. Beitriige rjiir Geschichte des fra)izdsischen 
Wirtschaftsleben ini elften Jahrhnndei-t. Dareste de 
LA Chavanne. Histoire des Classes Agricoles en France, 
Chs. VI-X. DoxiOL H. Histoire des Classes Riirales 
en France Li\'res I-III. 

CjER^LWY. 

v. Ixama-Sternegg K. T. Deutsche IVirthschaftsge- 
schichte, Bd. II. Absch. II-V. Lamprecht K. Ar- 
ticles on Grundbesits, Agrargeschichte, Bauer {allge- 
inein. geschichtl. Skizze), Banerngut u. Baitenistand, 
all in the Handw. d. Staatsiviss. 
Other Examples of the Village Communlty^ 

OE Laveleye E. Primitive Property {^q.wqxz\). Maine 
Sir H. Village Conniiunities in the East and West, 
Lect. IV. (India). Nicholson J. S., as above. Ko- 
v.\LEVSKY M. Tableau des Origines et de P Evolution 
de la Fa mi lie et de la Propriete, Legons XIII-XV, 
HouRWicH I. A. 77ie Ecotiomics of the Russiaii Ul- 
lage, Chs. Ill, V-VI. {Columbia Studies in Hist. Ecs. 
and Pub: Laiv, Vol. II). Wallace D. M. Russia 
Chs. VIII, XXIX. Leroy Beaulieu A. The Em- 
pire of the Tsars and Russians. All writers mentioned 
after Maine refer to Russia. 



46 Manor. 

Effect of Feudalism on Economic Life. 

Evident that the lack of unity in law and administra- 
tion, the isolation, and even constant warfare, of small 
communities must i:)revent any considerable develop- 
ment of trade and hence of cities. Agriculture was 
thus reduced to providing the common necessaries of 
life, instead of producing a surplus for exchange. Cities 
and commerce never entirely disappeared, but they were 
alien elements in the feudal organization, and their 
growth involved its destruction. 

The Manor. 

Though the forms of the feudal system were not pre- 
cisely the same in all countries, they had a general sim- 
ilarity which enables us to treat as fairly typical, at least 
for France and Germany, the system as it existed in 
England. Everywhere the unit was the estate on which 
dwelt the peasants, cultivating the land, and the lord of 
the estate, or his representative. This estate was termed 
m England the inanor. h^ach manor was, for the most 
part, economically self-sufficient, the chief articles ob- 
tained from without being salt, tar, iron, and millstones, 
to purchase which, for the whole village, the manager of 
the lord's estate made, at certain seasons of the year, 
journeys to the fairs or towns where such things were 
obtainable, the .surplus agricultural produce affording 
the means of payment. I'oreign trade also existed to 
a greater or less extent, the luxuries of the wealthy 
being for the most part obtained in this way. Travel- 
ling tradesmen may also have existed to some extent. 

Tlie chief source of iiifoniiatioii coiiceniinj!; the economic life of early 
Knglaiid i8 the Domesday Survey (IOS(!), which covereil apparently the 
whole of England with tlie exception of North unilierland, Durham, Cum- 
berland, Westmoreland, Xoi'tli Lancashire, and Monmoutlishire. It 
showed it,-J5(» manors. The niimlierof tenants in cliief was 1,400, of under 
tenants 7, ".too. ^Nlany tenants-in-chief liad a large number of manors; the 
king himseU liail 1,4'2'2, his brother 7'.i;5, another 489, another 4i'2 The man- 
ors seem to have varied in size from a few hunilreil to several thousand 
acres. The gurvej' indicates tliat there were about ."ijOtMl.OOO acres undei- 
tillage, nearly one-half of what is now cultivated in the same area, and 
that the population was about 2,000,000. The total town population 
seems to have been less than 2(X),000, and, outside of London, there 
were only five towns with a population of over .1,000. Population was 



Lands aud Buildiiii^s. 47 

more dense in the soiilli tli;m in tlie iioitli, most, dense of all in a nav 
row stri)) of country stretchiny:. from the coast of Norfolk and Suffolk 
in a southwesterly dii-ection to Somci-set ami Dorset. 

Lands axd I^lii.dixgs of thi-: Maxok. 

1. The house of the lord of the manoi-, sometimes with 
out-buildings for servants and animals, and the land sur- 
rounding it, which might be used for agricultural pur- 
poses, the whole or a portion being probably enclosed. 

2. The houses and yards of the peasantry forming a 
compact village. 3. The bulk of the arable land tem- 
porarily enclosed while the crop was gi^owing, at other 
times thrown open as common pasture, roughl}' divided 
into ten-acre sections (furlongs), and each of these 
divided into acre or half-acre strips. 4. Meadow land 
temporarily enclosed and usually di\ ided into acre or 
half-acre strips like the arable. 5. Common pasture and 
woodland {i<.Histc). 6. l^ermanent enclosures of arable 
or meadow land, held by the lord, by a free tenant, on 
rental, or possibly e\'en b}' an unfree tenant. 7. The 
parish church, the house and garden of the priest, 
the mill, etc. i, and those portions of 3, 4, and 6, which 
belonged to the lord, constituted the deincsiie land; 2 
and those portions of 3 and 4 belonging to the unfree 
tenants, the land held in villainage ; the latter prob- 
ably amounting to from three-fifths to two-thirds of the 
whole amount untler cultivation. 

PoPLi.ATiox oi' rur: Maxcik. 

1. The lord (or his baliff), owner of the land and .stock, 
though his proprietary rights were subject to important 
limitations ; exercising judicial and administrative author, 
ity ; holding for his own use the land around the manor 
house, outlying enclosures of arable and meadow land, 
and numerous acre and half-acre strips scattered about 
in the great arable fields, and ha\ing unlimited rights of 
pasture in the waste. 

2. The cultivating and dependent classes (the figures 
given are those of Domesda)- as stated in Social England 
1.240). (a) I ^illains (iog,ooo); important everywhere ; 



48 Population. 

least numerous in eentral eastern eounties ; normal 
holding, in additon to house and garden })lot, ahout 30 
• acres composed of acre and half-acre strips scattered 
about in the arable fields ; limited rights of pasture in 
the waste and rights in the ccjmmon meadows ; either 
singly or in groups of two or three they owned oxen 
and a plough (an average of several manors shows about 
half as many ploughs as villains) ; bound to the soil, and 
to render certain services to the lord. These services 
varied from manor to manor, but the following enumer- 
ation may be taken as typical : (i) two or three days' work 
each week in culti\'ating the lord's land ; (2) additional 
labor at ploughing and harvesting ; (3) miscellaneous 
pavments, in produce or money or both, and services, 
c. g., carting produce to market. The lord also enjoyed 
certain prerogatives, such as having all corn ground at 
his mill. Hereditary succession in holdings seems to 
have been customary, {b) Cottars and Boniars (90,000) ; 
specially important in central southern and central east- 
ern counties ; condition generally similar to that of vil- 
lains, but with smaller holdings (5 acres) and less oner- 
ous services ; usually not owning plough or oxen, (r) 
Freemen or Socmen (35,000) ; confined almost exclu- 
sively to central eastern counties where Danish influ- 
ence was strongest. The distinction between freeman 
and villains is not ea.sy to define, nor is the condition of 
the former by any means uniform. Sometimes they 
seem to be what their name implies ; at other times 
they seem to differ from the villains only in exemption 
from some of the more onerous and degrading services, 
c. g., week work, (d) Slaves (25,000) ; most numerous 
in central and southwestern counties. Absolute slavery 
rapidly disappeared after the Norman conquest, the 
slaves tending to merge with the cottars. 

Methods of Cultivation ; Occupations. 

Cultivation. Aside from the labor of the slaves (rela- 
tively unimportant) both the demesne and the land in 
villainage were worked by the serfs, who used their own 



I\fctIiods of Ciiltivaliou. 49 

oxen and ploughs, as well as those of the lord, on the 
demesne land ; the three-field system usual ; this com- 
bined with the facts that the individual holdings were 
made up of strips scattered in the different furlongs, 
and that two or more villains frequently combined in 
the ownership of plough and oxen, indicates a system 
of cultivation in which each individual conformed to the 
accepted routine of the manor. Occupations. While 
agriculture was the predominant industry, and whatever 
division of labor existed was probably based for the 
most part on sex, and the seasons of the year, rather 
than on a permanent division of occupations, yet there 
is evidence of some specialization. Some of the more 
important special laborers (sower, keeper of the bees, the 
various herdsmen, woodward, and hedgeward,) were 
engaged in agricultural pursuits. They seem to have 
been villains whose services assumed these special 
forms, and there is some doubt whether they were in 
the service of the lord alone or of the whole village as 
well. The same doubt also exists m regard to the handi- 
craftsmen (workers in wood, iron and leather) who are 
sometimes mentioned as belonging to the manor. 

General Results. 

The indications are that the mass of the people led a 
life of hard labor (in the busy seasons the working day 
was probably fourteen hours at least, with perhaps two 
hours for rest) gaining a coarse, but sufficient and 
assured, subsistence. Grain supplied the main food, 
but meat, vegetables, dairy products and eggs, were 
probably in common use ; clothing of wool or skins, 
though coarse and simple, was doubtless sufficient for 
warmth ; houses were of the rudest kind, constructed 
probably of wood or stone plastered, perhaps, with clay, 
and with thatched roofs ; they contained usually but a 
single room with no chimney, the refuse heap standing 
before the door. 

The Di'.cAv oi"-the Manor l\l Svsi'KiVL 

This system, well defined cuul |)redominant at least a 



50 Decay. 

century, and probably more, before the Norman C(jn- 
quest, began soon after to undergo a gradual change, a 
process greatly hastened by the l^lack Death, losing in 
relative importance until by the period of the Reforma- 
tion it had ceased, in its original form, to play an impor- 
tant part, either economically or politically, though the 
traces and effects of the system are clearly seen even 
in our own day. The fundamental cause of this change 
was a change in industrial conditions marked by a 
growth of commerce and the handicrafts and the intro- 
duction of a money economy. This gave lise to a desire 
on the part of the agricultural class, whether lord, ten- 
ant, or serf, to produce for the market and to purchase 
their manufactured articles in the towns. This in turn 
led to the effort to extend cultivation ; to introduce new 
methods of cultivation ; to increase the production of 
things for which there was a demand in the towns, 
especially wool, which was the basis of a rapidly grow- 
ing industry, could be easily transported, and was largely 
in demand abroad ; to secure more efficient and regular 
labor in place of the serf labor ; and, on the part of the 
cultivators, to the desire to control their own time, and 
to escape burdensome and irritating conditions of tenure 
which appeared even more humiliating by comparison 
with the growing freedom of the towns. The natural out- 
growth of these conditions was, i, the substitution of 
money payments for services as the c(»ndition of land- 
holding ; 2, the substitution of hired labor for serf 
labor ; 3, the extension of enclosures both of the demesne 
and the waste. All of these involved essential modifi- 
cation of the manorial system. After the middle of 
the fifteenth century, enclosure for pasturage, due to 
the rapid growth of the sheep industry, encroached 
even on the common fields and led during the succeed- 
ing century and a half to the practical disappearance 
of the older system throughout a considerable portion 
the country. 



LECTURE IX. 



THE INDUSTRIAL ORGANIZATION OF TOWN LIFE. THE GILD 
SYSTEM. 

General. 

Articles on Corporations of Arts and y/v^fr/^-j- (I^algrave's 
Dictionary of Political Economy) ; Corporations if Arts 
ct Metiers : Conipagnonnagc {Nonvean Dictionnaire if 
Economic Politique) ; Gilde7i, Znnftzvcscn {Handwoi'tb. 
d. Staatszviss.) ; Die rechtlicJic Ordnnng des Getverbe- 
zvesens in Schonberg's Handb. d. Pol. Oek. XXI, II. 
The French and German works devote particular at- 
tention to their own countries. 

Ex (i LAND. 

Bren'J'ANO L. On the Origin and Development of 
Gilds and the Origin of Prades [^nions (prefixed to 
Smith's English Gilds and also printed separately). 
Ashley, Cunningham, Ro(;eks, Ochenkowskt, and 
Social England (yo\^. I-III) as in j^revious lecture. 
Gross C. Phe Gild MercJiant (best on the subject.) 
Selic;max E. R. A. Pivo Chapters on the Jllediceval 
Gnilds of England (Pubs, the Am. Ec. Ass. Vol. II.) 
Ash lev W. J. Phe Early History of the Iinglish 
Woolen Pidustry (Pubs. Am. p:c. Ass. Vol. II). Hib- 
BERT Y . A. Influence and Development of English 
Gilds (Shrewsbury). Herbert J. 77te History of the 
Pivelvc Great Livery Companies of London, 2 Vols. 
Clooe C. M. 7 he Early History of the Guild of 
Merchant Taylors (Pt. I. History. Pt. II. Eives of 
members), (jreene Mrs. J. R. 'Pozon Life in the 
Eifteen th Century. 

France. 

R.\mbaud as in previous lecture. Lavasseur I{. His- 
toire des Classes Onvrieres en Prance. 



52 Gild Merchant. . 

Germanv. 

Stieda \V. Znr Entstehniig dcs dcutschoi Zitnft'u'isciis 
(Jahrb. f. Nat. u. Stat. Jahrg. XIV. Bd. II. "Heft 3). 
ScHANZ G. Z//r GscliicJitc dcr Gcscllcii-]^crhdudc in 
Mittclaltcr. 

DOCUMEXT.S ANH RECORDS IlLU.STK ATI VE OF CiTV AND (jILD 

Life. 

Smith T. EjiHisJi Gilds. The Oi-isrinal Ordinances 
of more than one Jinndred Early English Gilds. Gross, 
as above (Vol II). Herbert as above. Clode as 
aboA^e ; also Memorials of the Gnild of Merchant 
Taylors. Rilev H. T. Memorials 0/ Londoji and 
London Life. Sdarpe R. R. Calendar of L^etters 
from the ALayor and Corporation of the City of London, 
circa 1 3 50- 1 370. Deppjng G. B. (editor) L^ivre dcs 
Metiers d' Etienne Boileau (Paris in the 13th century) 
Ouin-Lacroi.x C. Histoire des Aneiennes Corpora- 
tions d Arts ct Metiers (Rouen). 



In the absence of a settled political order organization 
for combined action in defence of local and class in- 
terests was a necessity. This was particularly true of 
industrial life, struggling for freedom from the hamper- 
ing control of the feudal lords. Individualism was an 
impossibility. The history of industrial association falls 
into two general periods ; that of the gild merchant, and 
that of the craft gilds. 

The Gild Merchant 

Marks the period when the trading class had become 
differentiated from the agricultural class but the artisan 
class had not yet become differentiated from the trading 
class. Appearing in some towns in the latter j^art of the 
eleventh century, it became general in the twelfth, 
almost every town having its gild merchant ( London 
and the Cinque Ports being the only notable exceptions). 
The gild of each place included, apparently, the great 



Mcrcliaiit (nlds. 53 

bulk of the merchant citizens, who might be at the same 
time craftsmen, and even some non-residents. It was 
governed by officers elected by the members, enjoyed 
important privileges, and was under certain obligations 
to the town. The priveleges were, i. Partial or 
complete monoply of home trade due to restrictions- 
placed on non-members. Among such restrictions 
were taxes, prohibition of sale or purchase of many ar- 
ticles except to or from gild members or after gild mem- 
bers had been satisfied, prohibition of trade at retail. 
On a few specified occasions, such as fairs, these re- 
strictions seem to have been remitted either in whole or 
in part. 2. Exemption from restrictions in other towns, 
secured by grant of the king, or by treaties with such 
other towns. The gild was under obligation to ensure 
that the goods sold were as represented and of good 
quality and that the price was fair ; it had power to en- 
force the market regulations necessary to this end, and 
frequently had jurisdiction in trade disputes. Religious, 
social, and mutual benefit features also played an import- 
ant part in gild life. The gild was practically a part of 
the municipal administration for the regulation of in- 
dustrial matters, and was doubtless frequently the pre- 
dominant power in that administration, but the two do 
not seem to have been identical except in some instances, 
in the period of gild decadence', where the functions of 
the gild were absorbed by the municipal administra- 
tion. 

With the increasing division of employments the gild 
merchant gradualy dissolved into, or gave way to, a 
great number of special gilds, each comprising those 
who followed a single handicraft or branch of trade, 
the craft gilds. 

Craft Gilds 

Mark the growing differentiation of handicrafts from 
trade and from each other. Appearing in the twelfth 
century, and at first opposed by the municipal authori- 
ties and the gilds merchant, they gradually gained the 



54 Craft Ciilds; 0!xaiii:zntii'ii. 

ascendency during the thirteenth and fourteenth cen- 
turies, and throughout the infteenth century consti- 
tuted the most characteristic feature of town life, 
The following description applies to the period of full 
development when membership had generally been ren- 
dered compulsory and the gilds constituted a principal 
element in the municipal administration. 

Organization. 

The gild members ( masters ) elected their own ex- 
ecutive ofificers, ( wardens, bailiffs, overseers, or mas- 
ters ), the general business of the gild being transacted 
in full meeting of the members. There was a common 
fund maintained by assessments, contributions, and 
fines. The classes of persons included in the gild 
organization were : 

1. Masters; full members, . carrying on business on 
their own account. 

2. Junrneynicn ; workers for wages who had alread)' 
served an apprenticeship and expected to become mas- 
ters. Each master employed only a few journeymen 
and they frequently lived in his house. By the 
end of the fourteenth centur)-, however, a perma- 
nent class of iourne3'men appeared. It is not clear 
whether the journeymen had a voice in the manage- 
ment of the gild. From the end of the fourteenth 
century on there is evidence of separate associations of 
journeymen, which, however, seem to have been sub- 
ject to the control of the masters' gild. 

3. Apprentices ; serving a term of years to learn the 
trade. Apprenticeship apparently at first not regarded 
as absolutely necessary, but had become general!}' re- 
quired by the end of the fourteenth centur)' ; usuaT 
term seven years. Apprentices as a rule lived in the 
house of the master who had general oversight of them 
and was required to look after their moral as well as 
their industrial training. 



I 



V 



I 



PriviIc\<^iS and h'nuctioits. 55 

I'KlNir.EtiES AND FUNCTION'S. 

1. Industrial ; (a) monopoly; (/^) guarantee of quality 
of goods, and hence regulation of apprenticeship, ma- 
terials, tools, methods, hours and times of work; (c) 
regulation of wages and prices ; (d) jurisdiction in trade 
matters. 

2. Political; (a) membership requisite for citizenship; 
(d) electoral bodies (frequently) for municipal officers ; 
(V) administrative bodies for such purposes as watching 
the streets at night ; (d) military di\'isions. 

3. PJiilantluvpic ; mutual assistance in times of sick- 
ness, lack of work, poverty ; provision of suitable 
burial ; provision for widows and orphans. 

4. Religious and Social ; patron saint in honor of whom 
festivals were celebrated ; common chapel or altar ; 
masses for deceased members ; gild uniform and em- 
blems. 

SOLIDAKrrV OF GlI-l) IxrF.KESTS. 

Little competition between members of the same 
gild ; sometimes the gild as a whole purchased the raw 
material and divided it among the members ; individuals 
compelled to share purchases with other members ; 
obligation to help members behindhand in their work ; 
limitation of the number of apprentices allowed to a 
single master. 

RlCLATIOX TO THE MUXICTPAL (niXEKXMEXT. 

This relation always one of subordination, at least in 
theory, and, apparently, usually in practice also, though 
the gilds as a whole or a single gild may s(jmetimcs 
have gained practical control of the city government. 
Municipal government had supervision and final de- 
cision as regarded all gild regulations ; this super\ision 
particularly important in the case of i)rices, the price of 
food being always regulated by nuinici[)al or ro)al 
authority. 



56 Estiuiate of Gild Sysitiii. 

Estimate of the Gilu System. 

The gild system was the product of the peculiar condi- 
tions of the times in which it flourished. Difficulty of 
communication and the character of the prevailing 
political organization excluded individual self-interest 
and competition as the regulating economic forces, and 
necessitated resort to public regulation in order to se- 
cure good quality, and fair prices, wages, and conditions 
of work. 

It is evident further : i. That the gilds were an im- 
portant factor in securing the independence of indus- 
trial and city life, a necessary step in economic and 
political progress. 2. That they served the purpose of 
industrial education at a time when it was much needed. 
3. That they afforded a most convenient instrument 
of municipal administration. 4. That they served a 
great variety of non-industrial interests now secured 
through a number of distinct agencies, public and pri- 
vate. 5. That they were suited only to a period of 
stable industrial conditions and would hamper the in- 
troduction of new processes or changes in industrial 
organization. 6. That there was great danger that pub- 
lic interests would be subordinated to the private inter- 
ests of the gilds, and that the control of the gilds would 
fall mto the hands of a few who would in turn sacrifice 
the welfare of the gild to their personal interests. 

CoXDITIOXS OF THE CONTINENT. 

In general similar, the development in Germany being 
somewhat later, but more enduring, on account of the 
lack of a strong central authority. In France, from the 
fourteenth century, the growing royal power exercised 
an important influence on gild development, at first 
hostile, but later using the gilds as instruments for 
establishing its own supremacy, and the development of 
a national industry. Other points of difference were : 
I. The struggle of the craft gilds for supremacy was 
marked by greater violence on the continent. 2. Their 
control of the city government was more com})lete. 3. 



Coiitiiuiital CiDiditions. 57 

The term of apprenticeship was usually shorter (Germany 
2-4 years, France 3-6 years ), though this was offset, 
particularly in Germany, by requiring a journeyman to 
travel for a number of years, frequently as many as 
five. 4. A masterpiece came to be required. 5. Asso- 
ciations of journeymen were more numerous and im- 
portant. 



LECTURE X. 



COnnERCE OF MEDIAEVAL EUROPE. 

CUNMNCiHAM, AsHLEV, RoGERS, Sociil/ Eug/cKud, R.\M- 

liAUD, and OcHEXKOWSKi, as in previous lectures. 
Anderson A. Origin of Cumuicrce, and McPhersox 
D. Annals of Commerce, give extended chronological 
accounts which have supplied materials for many later 
histories. \\'ille\m.sox J. B. The Foreign Commerce 
of England nnder the Tudors, based on Schanz G. 
Englische Hande/spoliti/c gcgen Endc des Mi tie la Iters. 
G1HBIX.S H. deB. History of Commerce in Enrope. 
Lexd-sav W. S. History of Merchant Shipping and 
Ancient Commerce. Veats J. Gro%vth and Vicissi- 
tudes of Commerce (not first rate). Adams G. B. 
Cii'ilir.ation dnrijig the Middle Ages, Ch. XII. Hal- 
lam H. Middle Ages Ch. IX. Ft. II. Seebohm F. 
The Era of the Protestant Revolution, Ft. I. Ch. II. (c) 
(a very brief but good account with map). Noel O. 
Histoire du Commerce du Monde, 2 Vols. Vol. I. Hevd 
W. Histoiie du Commerce du Levant. 

Baxklxc;. 

DuxBAR C. F. The Bank of ]'enice {(Juart. Jour. Fes. 
VI. 308). Mystery of the Nezv Eashioned Goldsmiths 
(Quart. Jour. Ecs. II, 255). 

Though commerce nevei" entirely ceased it was reduced 
to a very low ebb by the (lermanic invasions of the 

■ Western Empire, and the conquests of the Saracens m 
Asia, Africa and Spain. 

Obstacles to the Re\t\'.\l of Co.mmi-:kci:. 

Even after the period of extreme social disorder had 

■ passed, there were serit)us obstacles to the revival of 
commerce, i. The physical difficulties of communi- 



I 



Obstacles to Coiiniurcc-. ■ 59 

cation ; not only Roman roads, but tlic art of road mak- 
ing had fallen into decay. 2. Lack of an abundant 
supply of the precious metals ; Roman mines, and the 
art of mining, had also fallen largely into disuse. 3. Lack 
of uniform and stable monetary s\stems. 

The coliiajre systfiiis ol iioitlnvestern Europe i;ni for the most part be 
traced to the sj>tein ot (Jliarleniagne, according to which a poujid ot 
silver was coined into twenty solidi, and each solidys into twelve dena- 
rii. With the rise of feudal prince?, and ialer of cities, each exercising 
tlie right of coinage, a great number of varying systems, with a more 
or less constant tendency towards debasement, came into existence. 
Ill France, about the muldle of the thirteenth century, there were eightv 
separate authorities having the right coinage, and tlu- /in-e contained 
only about one-fourth the amount of metal whi<-h it liad in the time of 
Charlemagne. The coinage system was not auilied until the end of the 
lilteenth century when tlie Uvre contained only about one-litteenth of 
of the original amount of metal. The conditions were as bad in 0«r- 
many. In England, ( 1 pound - -20 ishilUnffs - -240 pence ) the kings suc- 
ceeded in retaining control of the coinage except during the reign of 
Stephen, and unlil the reign of Edward III there seems to have been 
no tendency to a falling oft in the standard. In this leign the pound 
weight of silver, which hail formerly been coined into cue potmd of 
money, was coined into one pound and Ave sln//int/s. As a result of 
subsecjuent reductions the pound of silver was in the reign of Edward 
IV. coined into one ponnd seventeen shiUiiujs and six pence. The 
amount of metal was rapidly diminished by Ileniy VII f. until the 
pound was coined into seven /loimd.i. (ov.v slii/lin<r.'<. I rom this time on 
the amount of metal was increased unt 1 under P:ii/.aljetli the pound 
was coined into three poini<l.-<, two slii//inf/.i at which it has since re- 
mained. Down to the leign of Edwanl III. few coins other than silver 
pennies were issued, tlioiigli loi-eign coim- d()iihtle>s cir<-ulated: with 
Edward III. began the coinage ol gold. 

4. The extreme political and administrative subdi\ision 
involved in the existence of feudalism and independent 
municipalities. 5. The oi>position of the church to the 
taking of interest and the ]nirsuit of gain. 

Ol'ii.ixe of Development. 

Notwithstanding these obstacles, a growth of commerce 
accompanied the de\'elopment of town life, already 
described, resulting in regular conmiercial intercourse 
not only between the diffei'ent parts of Europe but with 
northern Africa, Egypt, and through Egypt, Constanti- 
nople and the Black Sea, with the East, lliis develop- 
ment becomes much more marked after the crusades, 
which not onl)^ created an increased demand in Europe 
for eastern products, and \'ice versa, and introduced into 



6o (rcoi^'raphv. 

Europe new processes and manufactures, but, by afford- 
ing the western nations a footing in eastern territories, 
rendered possible a more intimate commercial con- 
nection between east and west. Two clear indications 
of the growth of commerce at this time are seen in the 
introduction of a gold coinage and in the development 
of banking, both of which took place in Italy in the 
thirteenth century, and spread from there thi"oughout 
northern Europe. 

Municipal Character of Commerce. 

Mediaeval commerce municipal in character, /. c, com- 
mercial policy and commercial regulations were con- 
trolled b)' municipal authorities in the interest of 
municipal aggrandizement. Every effort was made, by 
the exclusion and taxation of foreigners, by treaties, and 
ev'en by war, to develop home industr)- at the expense 
of the industr}- of other cities and the surrrounding 
countr}'. 

Geography of Medi.fa'al Commerce. 

I. Coiiniicrcial and industrial centers, (c?) Theltalim 
cities (\^enice, Milan, Elorence, Genoa, Pisa), centers of 
the finer kinds of manufactures (silks, laces, jewelry, 
glass, armor, and all kinds of fine metal work), as well 
as centers of trade between the west and east, (b) The 
cities of northern P^ ranee, Flanders, Brabant, and Hol- 
land (Lille, Bruges, Ghent, Leyden), centers of fine 
manufactures, jDarticularly woolen and linen cloths. 
(c) Cities of northern (jermany (Lubeck, Bremen, Ham- 
burg). The most important of these cities united for 
commercial purposes in the Hanseatic League, with 
membership scattered over the territory from the 
Zuider Zee to the Gulf of Finland, and inland as far as 
Cracow and Cologne. This league with its factories in 
the principal cities of the districts with which it traded 
(London, Bruges, Bergen. Novgorod) was from the 
fourteenth to the sixteenth centuries the great commer- 
cial power and agency of northern Europe, {d) Rhine 



(Jeoi^rapJiy ami Oro-a)iiz:atio}H. 6 1 

cities, centers of manufactures and a productive wine 
region, {e) Swabian cities. Both the Rhine and 
.Swabian cities derived a great part of their importance 
from the fact that they were situated on important in- 
land routes between northern and southern Europe. 
Russia, the Baltic countries (metals, lumber, oil, pitch, 
tar, furs, skins, fish) and England (wool, skins, lead, 
tin) were the principal sources of supply for raw- 
materials. It was not until towards the end of the 
mediaeval period that English handicrafts and com- 
merce attained a position of importance in the world's 
commerce (cloth industry the first to develop). 
2. Commercial routes, (a) Between western central 
Europe and the northern countries and Russia by way 
of the Baltic. {I') Between western central Europe and 
Italy ; (i) by se;\, principally in the hands of the Vene- 
tians ; (2) by the Rhone ; (3) by the Rhine with diver- 
gent routes over the Alps, (c) Between western and 
central Euro]De and Constantinople by way of the Dan- 
ube, (ci) Betv/een Italy and the East ; through the 
Mediterranean to Egy]3t, Palestine, Constantinople and 
the Black Sea, and from these points inland by caravan 
routes and rivers ; and by the Red Sea or by the 
Euphrates and Tigris and Persian Gulf to India. 

()rg.\nization. 

Commerce was not carried on independently by indi. 
viduals and continuously, but fleets frequently under 
military protection sailed at stated periods (deter- 
mined according to the seasons, frequently only once or 
twice a year) over regular commercial routes, to definite 
commercial centers. PYom these centers commodities 
were distributed throughout the surrounding country by 
means of fairs, and town markets held once or twice a 
week, through which agencies were also^'collected the 
the surplus j^roducts of neighboring districts. Many of 
these fairs were of international importance, being fre- 
quented by traders from all countries (Nijni Novgorod, 
Leipzig, Frankfurt, Stourbridge, Winchester, Troyes, 



62 C oiuhisiol. 

Lyons, Beaucaire, and many others). It was customary 
for a city or group of cities to maintain in other cities or 
districts with which its trade was most important, a set- 
tlement (^factor)/) composed partly of a permanent com- 
mercial population, and partly of a shifting class of 
traders. This settlement usually occupied a particular 
portion of the city, was exempt from the jurisdiction of 
the city where it was situated, governed by its own 
officers, and of course in intimate relations with the 
parent citv, focussing the trade of that city with the 
district in question. 

Conclusion. 

Notwithstanding all that has been said commerce was 
a far less essential element in the economic life of the 
middle ages than in the life of to-day. The difficulties 
of transportation rendered impossible an extended com- 
merce in the more important food products and the 
heavier raw materials except along the sea coasts and 
navigable rivers. 



LECTURES XI.-XII 



TERRITORIAL EXPANSION AND NATIONAL ECONOHIC OR- 
GANIZATION. 

IJ|SC0\KR1ES AM) TkKK IK )KI A 1. Exi'A NSK ).\. 

Noel and Gip.r.ixs as in previous letters. Skki.kn' J. R. 
Expansion of Rns^land. Llcas C. P. Introduction to 
a Historical (icoi^raphy of the British Colonics. I)r(>\- 
SFN J. (7. Historischc Ilantlatlas. 

NaI'IoX \l. 1{CI).\(>.MI( ( )K(.AN1ZA IIO.N. 

(h-:xkral; 'riii'. Mi;rcaxtilk Sysikm. 

The best account of the g'eneral character and signifi- 
cance of the development of national control of indus- 
try is by Schmollp:r G. Das Mercantilsystcni in 
seiner historischen Bedentung ( Jahrb. f. Gesct.z. 
l^erivalt. n. Volkszvirth. Jahrg. VI [I. Ne/t I.) Ingram 
J. K. History of Political Fwononiy pp. 36-42. Smith 
A. Wealth of Xations, Hk. IV (a thorough discus- 
sion by a strong opponent who did more than an)' 
other writer to overthi'ow the system.) 

IXDJXIIH AL Si A i KS. 

England ; Cunxlxghaini as in previous lectures. 
France; Baudrillari' H. Jeaji Bodin et son 
Temps. CuAir.r.FA J. .Sally. Blanoui J. A. His- 
tory of Political Economy, Chs. XXV-XXVII. Mar- 
TFx H. History of France, Age of Louis, XIV. \^)1. 
I, (Eng. trans.) Perkins J. B. France ujider Rich- 
lien and AIa.':;arin, (^howA conditions before Colbert). 
Clement P. Histoire de Colbcit 2 Vols. P\arnam 
H. \V. Die innere franzdsische Geiverhepolitik von 
Colbert bis Tnrgot. Cxiw^ G. Colbert {Zeitschr. f. 
Ges. Staatszuiss. 1869, 1870.) 

Pru.ssl\ ; SchmollerG. Studieniiber die zvii tsehaft- 
liche Politik Friediichs des Grossen {Jahrb. f. G. / '. 



64 Eiouoiinc Chan ires. 

V. V. as above). Tu itle H. History of Prussia 

under Frederic the Great . 

Holland; McCullagh W. T. hidusti ial History 

of Free Nations. Vol. II. Laspkvres E. Geschichte 

der Volkswirthschaftlichen Ansc hauungen der Nicder 

lander. 

Navigation' Acts; Cof.oxLAL Policy; Commf.rcial 
Companies. 

In addition to above (especially Giiuuxs, Noel, Las. 
PEYRES, and SMrrn), Beer G L. TJie Coiimiercial 
Policy of England toivard the American Colonies 
{Col. Coll. Stndies in History, Economic and Public 
Laiv III.) Hewins W. A. S. English Trade and 
Finance. Bonnassieux P. Les Grandes Compagnies 
de Commerce. 

Legislation (England). 

The Statutes of the Realm. Prothero (t. W. Select 
Statutes and Constitutional Documents (I^lizabeth and 
James I). A translation of the Statute of Labour- 
ers may be found in Henderson's Historical Docu- 
ments of the Middle Ages. 



Erom an economic standpoint the most important facts 
of the si.xteenth and seventeenth centuries were i. The 
diminishing importance of the Italian and German cities 
due, to the conquest of Constantinople and Egypt by 
the Turks, coincident with the discovery of America, 
and of the passage to India by the Cape of Good 
Hope, and, in the case of the latter, to the internal wars 
of Germany. 2. The increasing importance of the 
Atlantic states, due to the same causes which led to 
the decline of the Italian cities. The first states to 
reap the benefits of the change were Spain and Portu- 
gal. Their ascendancy was of short duration, Holland 
succeeding to the commercial leadership in the first half 
of the seventeenth century, yielding in turn by the end 



Xationalization of Economic Life. 65 

ot the century to England and France, the tormer pre- 
dominating. 3. The increasing control of economic 
life by the central governments. It is this point which 
is most significant for the development of the econo- 
mic organism. 4. Extension of European influence in 
America and Asia. 

Nation-M-ization ()|- Economic LiFii. 

It must not he supposed that the Importauco of the towii^ as Indus 
trial centers diminished, nor even that they lost entirely their local 
privilege-), but simply that their influence in the T-egulation of Indus 
trial matters was constantly becoming less as compared with the 
influence of the central governments. The gilds continued to exist, 
though they tended to lose their democratic character; to separate 
into two classes, the one of wealthy, influential gilds, the other of 
poorer gilds; to become close corporations; and to lose their Indus 
trial importance, as in England, or to become instruments of tlie 
national administration, as in France. 

The national governments gradually assumed the regu- 
lation of those matters for which the towns were no 
longer competent, and in general it may be said that 
they merely developed and continued on a broader basis 
the economic policy of the towns, i. e. replaced the 
l^olicy of municipal by that of national aggrandizement. 
This involved a system of internal regulation directed 
to developing, consolidating, and .strengthening the 
economic life of the nation and to increasing its popu- 
lation, and an aggressive foreign i)olicy directed not 
only to the advancement of home interests but to the 
economic injury of competing nations. In carrying 
out these purposes the nations of Europe developed 
a system of economic policy which in its general out- 
line was uniform for all ; the mercautile system. 

Mkkcantile System. 

The main ends sought were 1. Accumulation of the 
precious metals. 2. Increase of population. 3. As a 
principal means to the.se, the growth of industry, par- 
ticularly of manufactures and commerce. As means to 
these ends may be noted as regards intertial regulation: 
ia) bounties on large families and early marriages ; {b) 
suppression of local trade barriers and regulations ; {c) 



66 Mciraiitilc Systcin. 

regiilati(^n of wages, conditions of emplovnicnt, C|ualit\ 
of products, and methods of production ; (<-/) prohibi- 
tions of idleness and extravagance ; [c) enc(juragement 
of new enterprises by grants of special privileges, b)- 
encouragement of immigrati')n of foreign aitisans aiul 
introduction of foreign jirocesses, and by establishment 
of model industries; (/) i^rohibition of emigration of 
artisans and the carrying abroad of domestic processes ; 
i^g) regulation of the coinage on sound ])rinciples and 
the encouragement of banking. As regards foreign 
policy: {p) prohibition of the exportation of the pre- 
cious metals (later generally abandoned, as interfering 
with trade and thus diminishing iha favorable balance) ; 
(/-') prohibition or limitation, through taxation, of the 
importation of manufactured products, as tending both 
to injure home manufactures and to withdraw large 
quantities of the precious metals ; {c) encouragement 
of the importation of raw materials for opposite reasons ; 
{d) encouragement of the exportation of manufactured 
products by bounties and otherwise, as a means of in- 
creasing home manufactures and securing the precious 
metals ; (r) prohibition or limitation of the exportation 
of raw materials, a means to {li) ; {f) chartering com- 
mercial companies with large powers, and encourage- 
ment of colonization as a means of acquiring control 
(jver the newly discovered territories; {g) regulation 
of the colonial trade in the interest of the mother coun- 
try ; (//) wars and treaties for the extension of markets. 
4. The building up of a strong merchant marine (and 
the destruction of the merchant marine of other nations) 
both as a means to the ends mentioned in i, 2 and 3, 
and as the basis of naval jDOvver. As means to this end : 
{a) bounties on ship building, voyages, and sea fishing ; 
{b) prohibition or restrictions on the use of foreign ves- 
sels in trade with the countr}' in question or its colonies. 

Not to be supposed thai this system prevailed in all its details in all 
countries. The main ends were common to all, l)iit the means em- 
ployed by a sinjrle country might include only a portion of those above 
mentioned, and a country might on a particular point pursue a policy 
not in accord with tlic mercantile system. The system was developed 



Hn_i:;lan(i. 67 



ill different couiilrics at illHcreut tiiiu'r^, <le)iiMi(lcnt oti the development 
of the central power. Instances of regulation in the spirit of the 
mercantile system are to be found In almost every country during the 
middle ages, but as a fairly complete system it was Jirst developed in 
Si>ain in the sixteenth century, in France and England in the later 
sixteenth, and seventeenth centuries, in Prussia in the cigliteenth cen 
tury, under Frederic the Great. 

Ex(iIAXD. 

Inteinial rcgnUxtious. Vwnw the niiddle of the four- 
teenth century lei^islation and royal ordinances lookini;" 
to the regulation of the industi"ial life of the nation 
(largel) ajjparently in the interest of the land-owning" 
classes) had not been uncommon. During the four- 
teenth aiul fifteenth centuries, however, the influence of 
such regulation was small as compared with the in- 
Huence of the municipalities and gilds. % 

Most important to notice is the Statute of Lal)ourers (1349), due to the 
scarcity of labourers and the high wages following the Black Death, 
requiring all capable of labor to accept em))loyment at the rate of 
wages prevailing before the plague. During the remainder of the 
fourteenth and the tifteenth centuries there were several enactments 
i-egulating wages, restricting the movement of labor (in the interest 
of the land-owaiing classes apparently), enforcing labor, providing 
sumptuary regulations, and fixing the prices of bread and beer. Much 
of this legislation was pidbably temporary (as in the case of the 
statute of Labourers) and it is rtoulitful if (with the excejition of the 
assize of bread and beer) it was strictly enforced. 

F'rom the beginning of the sixteenth centur\' the in- 
creasing influence of the national government is marked. 
The most striking evidence of this tendency is seen in 
the establishment of a national church and the confis- 
cation of the estates of the monasteries and the religious 
fraternities, as well of the income of the gilds devoted 
to religious purposes ; it holds equally true in industrial 
matters, however. 

» A law of 1.503-4 re((uired that no gihl should henceforth enact any 

ordinance except with the approval of specified royal officers. The 
poor law of 1536 I'ccognized the obligation of the state (local authori 
ties) to provide work for the able-bodied poor and to relieve the 
impotent, thus taking the first step towards an elaborate system of 
public poor relief. During the reign of Philip and Mary was passed 
the first genera] law for the repair of loads. 

The most complete results of this tendency in industrial 
matters were the Statute of Apprentices, so called, 
( 1563) and the poor law of 1601. The Statute of Ap- 
prentices really provides a fairly com])rehensi\'e rcgula- 



68 Stdluh of Apfyrentices. 

tion of the industrial life of the nation, with the purpose 
as stated in the preamble to " banish idleness, advance 
husbandry and yield unto the hired person, both in time 
of scarcity and in time of plenty, a convenient propor- 
tion of \va<;"es." 

Tlif |)re;iiiil>le status that many staliitcs concerning the condition? 
and wages of labor have ))een passed, but were not and could not be 
enforced, since some were antiquated, and taken together they embed 
ied many contradictions The purpose of the present act was stated to 
be the codilication and revision of this boily of legislation. It- principal 
provisions were as follows: 1. Requirement of seven years apprentice 
ship for "any craft now used within the realm of England or Wales.'" 
■2. Regulation of way ex by justices of tlie peace and town olHcers. 'i. 
Hours of labor; artificers or lai>ourers hired by day or week, f> a. m., or 
earlier, to between 7 and Sp. m., with not more than two and one-half 
hours lor meals, from March to September, and from the "spring of 
the day " uniil night, from Septemb' r to March. 4. Enforcem^nt of 
•^!- labor; {a) enumeration of 3-i important trades (including <dothing. 

leather and iron tratles, bakers, brewers, liutchers, millers and others) 
in wliich any unmarried person, or married person under tliirty, 
skilled in any of said trades, out of emplojniient, and not iiossessed 
of a certain amount of property, could be compelled to serve; (b) 
Every person l)etweeu 12 and 60 years of age, not employed in any of 
llic ways provided for by the statute (gentlemen, students, and per 
sons of propel ty excepted), might be compelled to serve in husbandry 
by the year with any i)erson who ndght need liini ; (r) At harvest time 
all " such artificers and persons as Ije meet to labour " miglit be com 
pelled to serve by the day at mowing and getting in the croi)s; (rf) .Any 
woman between 12 and 40 years of age, unmarried and out of 
work, could be compelled to serve at such em]>loyment and for such 
wages as tlie public ofticials should deem suitable; (e) "If any person 
shall be requiied by any householder, having half a ploughland at the 
least in tillage, to l)e an] apprentice and to serve in husbandry or in 
any other kind of art before expressed" he may be compelled to do 
so, provided the pulilic ofticials regard hin) as suited to the art in ques 
tion. No ))ersons, except those under -.'l years of age, were however, 
bound to become av>prentices. 5. Requirements as to talcing appren- 
tices; (rt) Any householder having half a ploughland in tillage might 
receive as apprenii(;e in husV)andry any person from 10 to IS years 
of age to serve until 21 "r 24 years of age; (b) Every householder 24 
years of age in a city or town corporate, engaged in any manual 
occupTtion might accept as apprentice "the son of au}- freeman 
ncjt occupying husbandry nor being a labourer " and living in a city 
or town corporate, such apprenticeship to be seven years at least and 
not to expire before the apprentice was 24 years of age; provided 
that no " merchant trafiicking into any parts beyond the sea, mercer, 
draper, goldsmitli, ironmonger, embroider or clothier, that doth put 
cloth to making or sale," shall take as apprentice any except his son, 
or one whose father or motlier has leal estate of the annual value ot 
40s.; (r) Same provisions with respect to unincorporated market 
towns, except that the property (jualiflcation was £.3; (d) No woollen 
cloth weaver (those in Wales, Westmoreland, Lancat-ter and Cumber- 
bind wiaving friezes or housewives cloth only, and those in towns ex. 
<-epted), weaving goods coniuionly sold, could have as apprentice any- 
one except his own son, or one whose father or mother had real estate 



69 



of the yearly value ul £>!; (e) -Jl trades (iiK-luilinj; iron and building 
trades, linen weavers, cooijcrs, millers, potters, woollen weavers of 
liouseliold clotli, fullers, burners of ore and wood aslies) in which the 
son of any person may be taken as apprentice, (i. lielatiom between 
masters and servants, (a) In tlie trades specilled in 4 (a) no one was 
to be hired for less than a year; (h) Servi('e could not be terminated 
on either side before the end of that term, except for cause, nor at 
the expiration of the time, even, except after a quarter's notice; (c) 
In cloth and shoe making crafts every person having three appren- 
tices was to have one journeyman and an additional journeyman for 
each additional appientice; (d) Justices of the peace and town officers 
were empowered to enforce lair treatment between masters and ser- 
vants. 7 litsirictions on the movement of labor: Xo labourer to leave 
the place where he had been employed except with a testimonial un- 
der tlie public seal. 8. Penalties: Fines and imprisonment, rather 
more severe for servants than masters. 

The Statute of Appi-entices pi-ovided for the industrious 
classes, the I\wr Lctiv of 1601 provided for the idle 
classes, whether idleness was due to incapacity or un- 
willingness to labor, pi-oviding- compulsory labor in the 
latter case and relief in the former, the expenses of 
both to be met from the local rates, provided there 
were no relati\es upon whom the duty could be im- 
jiosed. • 

Thisact again was tlie culmination and codilication of numerous pre- 
vious acts passed for the most part since l.i;^u. Its principal jtrovisions 
were as follows: 1. Any poor iierson having children, parents or 
grand-pai-ents able to support him was to be supported by the relatives 
in (juestion. 2. Any person without means of support l)y himself or 
his i>arents, and not earning his living, was to be set to work %. Desti- 
tute children might be apprenticed up to the age of 24 for males, and 
•21, or until married, for females. 4. Destitute people unable to work 
were to J)e given necessary relief and houses might be erected for 
their accommodation, h. The execution of the act was placed in the 
hands of overseers of the poor (aiipointe<l for each parish by the jus- 
tices of the pea<'e, or. in corporate towns, by the town officers), who 
had authority to levy rates to meet the expenses incurretl. A previous 
act (1598) provided that rogues, vagabonds and sturdy beggars should 
be openly whipped "until bis or her body be bloody" and sent to the 
parish of their biitli, or if that was unknown, to the parish where they 
had last dwelt, or passed through without whipping. Those thought 
dangerous were to be sent to the house of correction, whence they 
might be transported beyond the seas or sent to the galleys. 

This branch of legislation was completed by an act of 
1662 regulating the conditions of settlcmait. It pro- 
vided that forty days undisturbed residence should give 
right of settlement. During this period, however, the 
parish officers might remove to the parish of his last 
legal settlement any new comer who did not hire a tene- 



Jo Foreign Policy. 

ment of the annual value of £\o, or gi\e security suffi- 
cient to ensure that he would not become a charge on 
the parish. 

The above shows the growth of national regulation. 
On questions of domestic industrial policy the English 
government followed in general the principles of the 
Mercantile System, though not in the thorough manner 
of Colbert in France. The measures which exerciseel 
the most fundamental and far-reaching influence were 
the settlement of the coinage system on a permanent 
basis by Elizabeth, the recoinages of 1560 and 1696, and 
the establishment of the the Rank of England in 1694. 

Tliere were no iliroct linunties on iiopulation, tlioujili the poor l;i\v, in 
the latter part oi the eighteentli century was administei-ed iu such a 
way as to have thi.s effect, and the effect on population was a reason 
(!onstantly urged for encouraging tillage rather than grazing. In the 
latter part of the sixteenth and in the seventeenth centuries there was 
a partial revival of gild life under the control of the central govern- 
ment, nominally for the purpose of regulating industrial nietliods and 
ensuring good quality in the products, though it is doubtful how far 
such supervision was actually exercised. Encouragement was given 
by grants of monopoly to the estaClisliment of new industries, but far 
more iniportant than this were the continental wars (especially the 
wars of Spain against the Netherlands, a nd the religious wars of France 
culminating in the revocation of the edict of Xantes In 168.o) whi(;h drove 
to England many of the most skilful artisans of Europe, (manufacture 
of silk introduced by French refugees.) The first steps were taken 
under tlie authority of tlie central government for drainage of the fens. 

Foreign Poliey ; in the main in accordance with the 
Mercantile System . The most notable exception (in 
great part apparent rather than real) was the legislation 
in favor of the agricultural classes. The corn laws pro- 
vided for {a) restrictions on importation, first by prohibition 
and later (22. C. II. 13) by duties decreasing as the price 
of grain increased, the interests of the consumer being 
somewhat guarded in each case by allowing free impor- 
tation when prices became abnormally high ; (b) bounties 
on exportation (first granted 1689) the interests of the 
consumer being again in part protected by a withdrawal 
of the bounty when the price of grain was abnormally 
high. 

Examined in detail tin; industri.'il policy of England during the KJlli, 
ITtli and Issth centuries, presents much of confusion, contradiction and 
instability, the explanation l)eing I'oiind iu the v.'irying success of dif- 



Auivigation Acts. 71 

fi!i-ent induistries in their etfoits to secure lavorahle legislation, iu the 
attempt to reconcile conflicting interests, andln the niixtni-e of finan- 
cial with purely industrial considerations. Tlie principles of the mer- 
cantile policy however, stand out clearly in connection with the treat- 
ment of the woollen cloth industry, by far the greatest of England's 
manufacturing Industries at this time. The Importation of foreign 
woollens was i)rohil)ited and liigh duties orprohibitions were placed on 
the importation of competing kinds of cloth. Under Elizaljeth the ex- 
]tortation of sheep was prohiliitcd and under Charles II, the same 
liolicy was applied to wool. 

Encouragcuicnt of Shipping; Navigation Acts. En- 
couragement to shipping by requiring certain commodi- 
ties to be imported in English ships, by excluding or 
placing heavy duties on fish other than those caught 
from English ships, and in other ways, had been given 
more or less constantly since the time of Richard II. 
Under Cromwell and Charles II, this policy was sys- 
tematized and greatly extended with the purpose not only, 
of building up an English Marine but also of destroying 
Dutch commerce. The act of 1660 (12, C. II, 18.) pro- 
vided. I. That no ships .should trade with the ELnglish 
colonies except ships owned by Englishmen, (or owned 
and built in the colonies) and with the master and at 
least three-fourths of the crew English. 2. No goods 
should be imported into England from Asia, Africa, or 
America in ships other than those belonging to English- 
men (colonists included) and manned as above. 3. No 
foreign goods should be imported into England except 
directly from the country of origin or from a port 
whence only such goods could or had usually been 
shipped. 4. No Russian products, nor any of a long 
list of enumerated, bulky, products should be imported 
in any but English ships manned as above. 5. No 
products of the Turkish dominions should be imported 
in any but English ships manned as above, or ships built 
and manned by the people of the country from which 
the goods were shipped. 

These acts, aimed directly at the carrying trade of the 
Dutch, were successful in their purpose and were an 
important factor and ^tablishing the commercial su- 
premacy of England. 



72 Colonial Policy. 

Colonial Policy, (a.) Requirement that certain colo- 
nial products, regarded as most important for English 
use, should be imported into England or English colonies 
only. 

The lii*t iiicluileil (IJ. C.ll, lt<) " .•^iifiars, tolmcco. ciitton, wool, iiidigoes?, 
giiijjer, fiistick, or otlier flyeing wood." Tlicrc^ were jutded later (3 
and 4, A. .5 and 10) molasses, rice, tar, i>it('li, tiiri>entine, lieinp, masts, 
yards, and bowsjjrits; and still later copper and peltry. Tliis policy 
was somewhat modified ))y special exceptions e. y., the exjiortation of 
rice and sugar, direct to countries soiitli of (ape Fiiiistci-re was per- 
mitted. 

{b.) Encouragement, by bounties and remission of 
duties, of the importation into England of some of the 
most essential products. 

Bounties were granted on tlie im]>ortation .)f lienip. masts, tar, pitch, 
rosin and other commodities. Kxemption from import duties was 
granted in the ease of hemp, lumber, jiig and bar iron, and i)earl and 
(lot-ashes, and partial remission to tobacco, molasses and otlier commo- 
dities. 

{c.) Requirement that European products should be 
shipped to the colonies from England only and in Eng- 
lish built and English manned ships. (15 C. II. 7.) 

Modilied by allowing importation of salt from any European (lort, ol' 
wine from Madeira and the Azores, of ])rovisions, liorses, or servants 
from Ireland or Scotland, and of linen from Ireland. 

{(l.) Restrictions on colonial manufactures. 

Prohibition of the exportation of wool or its manufactures from tlic 
colonies, as well as its transportation from colony, or from place to 
place within a colony (10 and 11 W. Ill, 10). Like restrictions were 
later placed on hats witli the f urtlier provision that no one should make 
hats, either as master or journeyman, who had not served a seven 
years apprenticeship, and that no master should have more than two 
apprentices (,i G. II, 2-2). By an act of IT.iO (23. G. II, 2!t) the establish- 
ment of mills, forges and furnaces for the working of iron was for- 
bidden. 

Conivicrcial Companies. The tendency to regulation 
which was universal, the lack of a well-maintained pub- 
lic order on the seas, and of a well-developed interna- 
tional comity, the result of the still imperfect political 
development, and the fact that the greater part of the 
newly developed commerce was with lands of a lower 
grade of civilization than that of Europe, all combined 
to throw the control of commerce into the hands of com- 
panies, each with a monopoly of trade in its own region. 



C ovimcvcial Coiiipauics. '/'"^ 

which bore something the same relation to commercial 
life that the gilds did earlier to industrial life, fulfilling 
political as well as industrial functions, maintaining 
consuls, ambassadors and even armies, and providing 
for the government of their trading centers and the 
territories which came under their control. These com- 
])anies were of two kinds ; {li) rcoiilatcd covipanics, 
membership in which was secured by the payment of 
certain established dues, each individual being left free 
to trade on his own account, the action of the company 
as a whole being confined to establishing trade regula- 
tions and providing for common interests ; {b) joint stock 
companies, membership in which was represented b}' a 
share in the common stock, all trade being carried on 
for the benefit of the comitany as a whole by its officers 
and agents. 

The oiliest of these coiiipanies w:is the Mevchant AilVentures, incoi'po- 
lateil 111 1407 .aud tradiu.a' with the Xetheilands and later with Hambursr 
also, (ithei' coiiiiiaiiies of jjreat importance during the seventeenth 
rentury were the Levant or Turkey Company trading with tlie east by 
the old Mediterranean route, the Eastland Company trading with the 
llaltie regions, the Muscovy (later, Rnssiiui) Company, the JRoyal 
African (Guinea) Compaiu', the Hudson's I!ay Company and, most ini- 
poriant ot all, tlic East India Company. The last three were joint stock 
companies, (the African Company was changed to a regulated IT.iO,) the 
others were regulated compaiii<s. Companies of the same general 
character existed in all the commercial nations at this time. 

'k.\N'CE. 

Evidence of the growing power of the central govern- 
ment as a regulating force in industrial life is seen as 
early as the latter part of the thirteenth century {Regis- 
trc dcs mcsticrs dc Paris under Louis IX ), but the first 
development of vigorous national policy along the lines of 
the mercantile system was under Charles IX, (ordinance 
of 1567 regulating the gild system and providing for 
supervision by the central government, edict of 1572 
prohibiting the exportation of wool, flax, hemp and 
yarn, and the importation of a great variety of manu- 
factured goods). The policy of national regulation was 
still farther extended under Henry III (ordinance of 
1 581 re-organizing, extending and bringing the gild sys- 
tem under the strict control of the central government), 



74 S/iI/y. 

and Henry IV with his finance minister, Sully, though 
Sully's views as to the predominant importance of 
agriculture and his opposition to luxury caused his policy 
to deviate from the strict lines of the mercantile system. 

Sully's policy whili' diiectud to the buihliiig up of a vigorous national 
economic life wasiiot stiictly in accord with mercantile principles. He 
believed fully iu the importance of accuniulatinj;- the precious metal.s, 
but his policy was niodilied by his view as to the predominant im)jor- 
tance of agriculture, and his opposition to luxury in all forms. His 
achievements may be summed up as follows. (1.) Financial Reform. 
The debt of France 1595 was about H(»0,000,000 lirrfS; a very small pro- 
portion of the taxes assessed (30,000,000 out of 150,000,000 lirres) reached 
the public treasury; there was a regular annual deficit. Sully freed 
France from debt, secured a balance between income and expenditure, 
and even accumulated a considerable war treasure. This was done 
largely bj- introducing economies and suppressing corrupt practic" s in 
the collection of revenue. (2.) Encouragement to agriculture l)y re- 
. moving restrictions on commerce in grain, by suppressing private and 
illegal exactions, and by exempting the cattle and tools of the culti- 
vator from seizure for non-pdyinent of. taxes. (3.) Improvement of 
means of internal communication (canal of Briare.) (4.) Improve- 
ments of fortifications, reclamation of public domain and improvement 
in its administration. The results of Sully's indifference to manufac- 
tures were modified by the action of Henry IV in inducing im- 
migiation of foreign artisans and by grants of special privileges, in 
encouraging the development of the finer kinds of manufactui'es, 
(especially silk.) 

The results of this period of vigorous economic policy 
were largely lost during the administrations of Richlieu 
and Mazarin, but under Colbert (1661-1683), intendant 
of the finances, and, later, minister of state of Louis 
XIV, was devised and put, in operation a system of 
state regulation, directed to the development national 
life and power, which affords, perhaps, the best example 
of the mercantile policy as one phase of the general 
policy of national aggrandizement. His work may be 
summarized as follows. 
I . Financial reform. 

Affected both national and local finance. Included («) investigation 
into the financial administration pince 1635 resulting in the recovery of 
135,000,000 livres in fines and repayment of revenues wrongfully ap- 
propriated by farmers and collectors; {h) reduction of debt by pay- 
ment, and cancellation of debt fraudulently contracted; (c) recovery 
of sources of revenue which had been alienated; {(I) administrative 
reforms, including reduction in number of financial ollicers, increased 
accountability of officers and suppression of arbitrary, harsh and l)ur- 
densome methods of collection; (e) reduction of expenditures due to 
general administrative reforms, especially reduction of tlie number of 
. useless oflice-bolders; {)') reduction of some of the more burdensome 



I 



Colbert. y t 

l;ix.-s; {,,) ivsuinpiioii of portioiis of tlie state donmiii wJiicli liad hecii 
wion-fully u»uri,e<L Tlie net result of these reforms was a moderate 
increase in gross revenues, a great reduction in tlie cliarges on tlie 
revenues, a great increase in the net revenue, and a balance between 
revenue and exi.enditure. The reform of the local finances comprised 
(rt) resumption of possession of pastures, woods, lands, usages, etc 
an<l all goods in common, sold or leased by communities since"l(i-'0 the 
value of legitimate alienations to be re-imburscd in ten vears- strict 
limitation of the rights of the seigniors in tlie commons, and remission 
by the King of his rights in the commons other than forests; {b) pay- 
ment ot the debts of the rural communes by the provinces; (c) limi- 
tatn>n on the l)orrowing powers of the communes; {d) return to the 
communes of ;i part of the octroi duties which had been taken l.v the 
state. 

2. Legal irfon/i. 

(a) Suppression of judicial abuses and strici enforcement of law in 
those districts where abuses liad been great, st {Great Days of An- 
vergtie); [h) Civil Ordinnnce, m-.oda of procedure simplifying and ex 
pediting processes and reducing costs (1667) ; (c) Criminal Ordinance, 
a code of (Criminal procedure (1670); Ordinance on Commerce, a com- 
mercial code (167;j). 

3- EiiconmgciHcnt of agriculture. 

(a) revival of piohibiiion of .seizure ..f beasts uf labor for the villain 
tax; (6) limitations on the seizure of cattle for debt; (e) improvements 
in the breed of lioises by importation of foreign breeds; (rf) rcn.oval 
of inter provincial duties on cattle; prohibitorv dutieson importation- 
(e) lowering of duties on exportation and raising those on importation 
of wines and brandies. 

4. Iniproviuicnt in nicaus of covnuuuicatiou. 

Improvement and construction of roads, canals of Lanaue.lo<- .nid 
Orleans. 

5. Conservation of national resources. 

Ordinance concerning waters and forests (b;*;;*) providin- l„r the 
preservation and regulation of the forests in accordance with the per 
manent Interests of the community. 

6. Removal of restrictions on internal trade. 

Suppression or limitation of tolls and duties on the movement of goods 
from place to place; consolidation of central France into a sln-ie cus 
toins union. 

7. Building up of vtanufacturing industries. 

(a) Duties on imports and exports determined in accordance with the 
principles of the meicantile system (tarilfs of 1664 and 1667- the latter 
much more highly protective than the former, and leading to a war 
with Holland which necessitated a modiflc.ation of its provisions) • 
(h) encouragement of the establishment of new industries bv giants 
01 privileges an<l financial aid, and by securing the immign.tion of 
foreign workmen; this policy applie.l to almost everv branch of indus- 



^6 Colbert. 



try, Init particuljii'ly to tlie ruicr iiiaiuifacluri'is; (c) regulalimi of indus- 
trial iirocesseti down to the minutest details, involving a revival and 
exten^rion of gild organization (renewal of the laws of 1581 and 1597) 
and a revision of gild law secui-ing the control of the national govern 
nient, unifonnity of conditions, ami suppression of local abuses. 

8. Enconragciiicnt of conivicrcc and the mercantile 
marine. 

(«) Establishment of free ports (Dunkirk anil Marseilles) and of en- 
trepots, with repayment of duties in case hi re-exportation, for mer- 
chants of all nations, in all French ports; (6) products of Freuch 
provinces outside of customs union allowed free 'iransit through 
France for exportation; (c) establishment of commercial <'omp:inies; 
(r^) remission of duties on materials for ship building and bounties on 
ship building and voyages; (e) organization of commercial boilies in 
a way to Ining opinions of merchants to bear on public authorities; 
(/) those of noble birth allowed to take an interest in ships and 
merchandise without injury to their rank, provided they did not en- 
gage in retail trade; {g) commercial treaties and establishment of 
consulates; (/t) establishment of commercial insurance companies. 

9. Eneonragement of the increase of popnlation. 

Exemption from publi(' burdens, and, later, pensions for fathers 
of ten children, none of whom were priests or monks; those 
who married before twenty exempt from public burdens until they 
were twcntv-li\ e. 



10. Bnilding np of t lie navy. 



Construction of slups, naval arsenals and fortilications; and organiza 
tion of the whole body of French sailors into a naval marine. 

1 1 . Provision for the poor. 

Ordered that hospitals bt established in every city and considerable 
town for the care of the sick, invalid and orphan poor " who should be 
instructed in piety and the trades of which they should show them- 
selves capable." 

12. Eneonragement of learning and the fine arts. 

Founded the Academy of Inscriptions and Belles-Lettres and the 
Academy of the Sciences: encouraged the erection of fine public 
buildings, and the establishment of manufactures for artistic products 

(C;(;/<e//»s). 

13. Mass of special legislators, similar in character to 
that above described. 

e. fj. legislation in regard to Paris regulating f'e trades connected 
with the provisioning the city, providing for lighting and cleaning thf 
streets, and refoi niing the judicial and police systems. 



\ 



LECTURE XIII. 



ECONOniC CONDITIONS ABOUT THE HIDDLE OF THE 
EIGHTEENTH CENTURY. 

Kncland. 

Cunningham, Smith and Ashlev (Bk. II. Ch. II.) as 
in previous lectures. Tovnbee A. Lectures on the 
Industrial Revolution iu England. Hobson J. A. 
The Evolution of Modern Capitalism (Ch. II). Held 
A. Zzvei B/icher zur socialen GeschicJite Englands. 
Pkotheko R. E. Pioneers and Progress of English 
Fanning. For contemporary accounts see Defoe D. 
A Tour through the ivhole of the Island of Great Brit- 
ain, and Aktiilm< YoifNo's accounts of his tours 
through the northern, southern, and eastern counties. 

France. 

Taine H. a. The Ancient Regime, v. Svbel H. 
History of the French Revolution, Vol. I. Ch. I. Lowell 
E. J. The Eve of the French Revolution. ■ Rambaud 
and Farnam as in previous lectures. For contempo- 
rar)' account see Young A. A Tour in France. 

Prussia. 

Seelev J. R. Life and Times of Stein. (Ft. III. Ch. 
IV. Ft. V. Ch. I.) 



Failure of the Policy of National Control and 
Aggrandizement. 

The causes or evidences of this failure may be sum- 
marized as follows: 

1. The policy was inherently weak as a permanent, 
exclusive, and universal policy. Carried beyond a 
certain point it necessarily reacted unfavorably on the 
economic condition of all concerned. 

2. Economic life had become too large and complex to 
be successfully guided, in its details, by government, 



78 Failnrc of Mcrrantilc System. 

and the measures and regulations adopted, borrowed in 
large part from those which had prevailed in connec- 
tion with the simpler organization of the manorial and 
municipal economics, tendered to hamper the develop- 
ment and expansion of economic life to which the 
growth of nations, the increase of wealth, and the ex- 
tension of commerce had given an impulse. 
3. There was an ever present tendency, increasing the 
more firmly national governments established them- 
selves, for the governments, and the individuals who 
for the time being composed the governments, to use 
their power for strengthening their own position, and 
supplying their own needs, rather than for the further- 
ance of national well being. 

As a result of these facts government control, espec- 
ially in those countries where it had attained the largest 
development, came to be felt as a repressive and bur- 
densome condition, the line of progress evidently lying 
in the direction of diminished governmental regulation 
and increased freedom of action for the individual. 

The use of its power by the crowu for its own, as distinguished from 
uatioual, purposes, and the popular indignation ^which it aroused 
thereby, is evident from the agitation, against grants of monopolies, 
which began in the latter part of the reign of Elizabeth and culmi- 
nated iw the statute of monopolies (21 and 22 J I, 3), forbidding 
the granting of monopolies except to inventors of new manufactures, 
for a period not exceeding foiirteen years. The act, however, was not 
to apply to grants or charters to cities or towns corporate, or to "cor- 
porations, companies or fellowsliips of any art, trade, occupation 
mystery, or to any companies or societies of merchants witliin this 
realm erected for the maintenance * * * of any trade of merchan- 
dise." The opposition to excessive state regulation was shown in 
France in the petition of the states general of 1614 that gilds organized 
since 1.576 be suppressed, and that the trades be left free, subject 
merely to inspection by state ofticers; and by the memoires (I'Ql) of 
the representatives of the principal commercial towns urging reduc- 
tion of duties and greater freedom in international trade. 

England. 

Population about 6,000,000. The great bulk of the 
industrial population was engaged in agriculture and 
manufactures were carried on largely in connection 
with agriculture. Outside of London (600,000-700,000) 
large towns were few and in many instances of recent 



I 



Conditions in England. 79 

growth. The tools and processes both in agriculture 
and manufactures were still primitive in character. 
Foreign commerce still played a relatively unimportant 
part in the life of the community. Although something 
had been done towards the improvement of river navi- 
gation, roads, with few exceptions, had undergone almost 
no improvement, waggon transportation except within 
a very limited area was an impossibility, and the cost of 
transportation was so great that internal exchange was 
kept within very narrow limits. The mechanism of 
exchange had undergone little modification since the 
middle ages ; fairs, markets and travelling merchants 
were still the regular agencies ; though banking in some 
form had been practiced for a century, and the Bank of 
England had been in existence for more than half a 
century, it had not yet come to play an important part 
in the general industrial life of the community. 

Bristol had about ino.OOO inhabitants, but aside from London and Bris- 
tol probably no town had more than 50,000 and very few more than 
25,000. Among these were several (Liverpool, Manchester, Birming- 
ham, Leeds and Sheffield, each numbering probably 25,000—40,000 in- 
habitants) which had practically come into existence since the begin- 
ning of the century, as a result of the effort of expanding industry to 
escape the restrictions in the older towns. By far the most important 
of the manufacturing industries was the making of woollen cloths. 
It was widely scattered over the country, was carried on largely in 
rural districts (in connection with agriculture ) whither it had been 
driven partly by the expansion of industry and, partly, to escape the 
regulations of the towns, and, it was estimated, employed in whole or 
in part, 1,500,000 people. Second in importance, but far behind the 
cloth industry, were the production of iron and the manufacture of 
iron products. Estimated that in 1720 these industries employed par- 
tially or wholly 200,000 people. The production of iron was, however, 
declining owing to the exhaustion of the forests and the consequent 
rise in the price of fuel. More than one half of the iron used in 
England was imported. As in the case of woollen cloths the manu- 
facture of iron was frequently carried on in connection with agricul- 
ture or vice versa. The remaining manufactures ( copper, brass, linen, 
silk, cotton), were of still less importance. Cotton manufactures 
which had come into existence since the beginning of the century did 
not employ over 40,000 people, and the value of the product did not 
exceed £600,000. Cotton was used as fllling only, in connection with 
linen warp. 

Smith mentions three important improvements which had been made 
in the woollen manufacture; 1. The exchange of the rock and spin- 
dle for the spinning wheel; 2. Machines for facilitating the proper 
arrangement of the warp and the woof before being put into the loom ; 
3. The employment of the fulling mill for thickening the cloth in- 
stead of treading it in water. (Bk. I.Ch.XI, Pt.lII). To these 
should be added Kay's invention of the fly shuttle in 1738. With these 



8o New Dcvclopvieuts. 



exception.s the manufacture of woollens was carried on in the same 
way as six hundred years before. The machines used in the cotton 
manufacture were, says Baines. nearly as simiile as those used in 
India. 

Since the end of the sixteenth century, when the enclosure movenieiit 
lost its force, there had Ijeen little change in agricultural conditions. 
The old open field system still survived to a considerable extent and, 
except for the partial introduction of convertible husbandly (use of 
land alternately for pasture and cultivation), there had been little 
«'liange in processes or tools since the middle ages, though cultivation 
was doubtless more careful ami thurough and the yield per acre con- 
siderably greater. 

Human and animal power were i)ractically alone available for either 
manufactures or agriculture. The following table will show the de- 
velopment of commerce: 

VEAK. IJIPORTS. EXPORTS. TOIAL. 

161.5 £ 2,141,151 £ 2,487,43.1 £ 4,628,,58(; 

1720 (i,0!IO,083 6,910,89!) 13,000,!t82 

1760 9,832,802 14,694,970 24,.t27,772 

Of the exports at the beginning of the eighteenth centur.v nearly one- 
half, about 1760 from a fourth to a third, were probably woollen doth.s. 
As showing the great expense of land transjjortation even where the 
use of waggons was possible Adam Smith says, "a broad wheeled 
waggon, attended by two men, and drawn by eight horses, in about 
six weeks' time carries and brings back between London and Edin- 
burgh near four ton weight of goods." (Bk.l, Ch. III). In another 
place he says that owing to the dilliculties of transportation English 
farmers need never fear the importation of Irish cattle, even though 
it should be made free. (P.k. IV, Ch. II). 

Neiv Dcvclopuicuts. While the above description holds 
true for English industry as a whole, there were also 
noticeable the beginnings of important changes, i. 
The growth of a body of surplus wealth ( /. c. of wealth 
over and above what was necessary to meet the im- 
mediate needs of its possessors), available for invest- 
ment or for carrying on industry on a large scale. 2. 
The development of the joint stock principle in indus- 
trial organization ; of credit ; and of the money market, 
all combining to increase the mobility of capital and to 
encourage saving. 3. The development of a class of 
capitalist entrepreneurs organizing industry on a large 
scale. There existed in the cloth making industry, 
particularly, a class of clothiers who, not themselves 
artisans, purchased the raw material, gave it out to one 
class of artisans to be cleaned and combed, to another 
class of artisans to be spun, to another to be woven and 
so on until the cloth was completed, when it was taken 



France. 8i 

to the fairs and cities to be sold to dealers. The 
clothier was the capitalist and organizer, assuming also 
the responsibility of finding a market for the goods 
produced ; the handicraftsman had lost his inde- 
pendent position, becoming a laborer, for wages, on the 
materials furnished by others, or, in case he purchased 
and worked up his own materials, he was dependent 
upon a middleman, who intervened between him and 
the cloth dealers proper, who sold to the consumer or 
exported the product to foreign countries. Intimately 
connected with this change in the organization of the 
industry was its extension from the towns to the 
country already noticed. In some cases this tendency 
of the artisan class to become mere laborers in the 
employ of the clothiers had gone still farther, the 
clothiers owning the tools and either letting them to 
the workers to use in their own homes or bringing the 
workers together in a single shop. 

The beginuiug of Uiis clianse is seen in Uie growtli of a class of clotli 
dealers or merchants as distinct from tlie cloth maimers. This differen- 
tiation took place, according to Asliley, about the middle of the four- 
teenth century. The class of clothiers, as above descriljed, first ap- 
peared about a century later, and in tl>e sixteenth century there seem 
to have been one or two instances of factories, i. e. shops where a con- 
siderable body of laborers worked together. Ashley thinks that, but 
for legislation, the factory system might liave developed two cen- 
turies earlier than it did and independently of the great mechanical 
inventions and the application of steam. 

France. 

Population about 25,000,000. Of these 140,000 belonged 
to the nobility and 130,00 to the clergy (Taine). Proba- 
bly four-fifths of the population were dependent directly 
upon agriculture for the greater part of their support. 
Outside of Paris which had a population of 600,000- 
700,000, Lyons (135,207) was the only city with a 
population of over 100,000. llie total population living 
in places of over 10,000 was probably about 2,600,000. 
According to Taine, the nobility, the clergy, the third 
estate (the town population }), the rural population, the 
King and the communes, each owned one-fifth of the 
land. The nobility and clergy did not as a rule cul- 



82 France. 

tivate their own land but let it out, usually in small 
parcels, on the system of metayage (division of gross 
produce between owner and cultivator). Though there 
were farmers working farms of moderate or even large 
size, the greater part of the land was in the hands of 
small cultivators, either peasant proprietors or metayers. 
The methods of cultivation were generally inferior to 
those of England and the condition of the rural popu- 
lation worse, though there is still much difference of 
opinion in regard to the condition of the cultivating 
class (see Taine and Lowell). There were certainly 
great differences between the different parts of the 
country, the conditions being particularly favorable in 
the northern manufacturing districts and in the south. 

Manufacturing industries presented much the same 
• general features as in England, but, owing to the 
stricter control, in many respects corrupt, exercised by 
the government through the gild organization, which 
was still maintained in full force, and which had bred 
an exclusive, selfish and unprogressive spirit among 
gild members, they had attained a less vigorous develop- 
ment. 

.Mercantile pursuits were subject to the same ham- 
pering influences as manufacturers. Tolls and charges 
on internal commerce still existed to a consider- 
able extent, new ones had even been added for revenue 
purposes, the right to levy them being, in some cases, 
sold to private individuals. The trade in grain was 
subject to government control and like everything else 
managed corruptly. While the main highways were 
much better than in England and some important canals 
had been built their effects seems to have been largely 
neutralized by the poor character of the local roads. 
Local famines were apparently not of infrequent occur- 
rence during the eighteenth century. 

The special conditions, most important from the 
economic standpoint, which made government regula- 
tion a failure in France, and aggravated discontent with 



France. 83 

the existing order, may be summarized as follows : 

1. The sacrifice of national well being to the selfish 
interests of the court and the privileged classes. 

The royal policy was directed principally with a 
view to raising revenue to meet the extravagant ex- 
penditures of the court. For three centuries the 
sale of public offices had been practised. The num- 
ber of such offices had been multiplied out of all 
reason purely for purposes of raising revenue ; trade 
monoplies, grants of nobility, masterships in gilds, 
exemption from public burdens, everything was sold 
in the same way. Gilds were multiplied simply in 
order to sell the privileges which they conferred. 

2. Corruption and inefficiency in the public adminis- 
tration, naturally growing out of the above conditions 
and aggravated by the custom which still prevailed of 
farming the indirect taxes. 

3. The burden, and still more the unjust distribution 
and harsh collection of taxes. The clergy were exempt 
from taxation, voting grants to the King as they saw fit 
and frequently obtaining from the public treasury more 
than they paid to it. The nobility were exempt from 
the taillc and were regularly under-assessed for the 
other direct taxes to a degree which made them practi- 
cally exempt. Each community was responsible for all 
the taxes assessed against it. In addition to the money 
taxes the rural population were subject to the corvee 
( compulsory and unpaid labor for building and main- 
taining the public roads). 

4. The survival of a great number of burdensome and 
irritating feudal servitudes in favor of the privileged 
classes after those classes had ceased to render any 
corresponding services. This condition was aggravated 
by the absenteeism of great landlords which had be 
come almost universal except where prevented by 
poverty. 

The servitudes mentioned atfected the whole peasant class and in- 
cluded payments, fixed or in proportion to product; payments on sale 
or inheritance of property; perlormauce of labor; use of the lord's 



84 /^r?/ssuy. 

mill, oven, and wine prei^s; market ami transiioitation (hlel^; recuirni 
tion of the lord'r^ liuntin<>; rights involvinjr restrictions on times and 
methods of cultivation; and many otlier liurdens similar in character. 
(For concrete illustration see Taine, note 2, p. 404). 

The above condition, rendering" uncertain the reward of 
industry and offering opportunities for obtaining wealth 
by securing political positions or grants of special privi- 
leges, weakened the motives and spirit of industry and 
were sufficient, without taking into consideration the 
oppressive, arbitrary and inefficient character of the 
government in other directions, to explain the economic 
inferiority of France as compared with England. 

Prussia. 

More backward in its economic development than 
France or England, but its economic organization pre- 
sented perhaps an even better example of strict govern- 
mental control, actuated bv consideration of economic 
well being, and exercised through the gild system 
(based on regulations of 1734-7), ^"d of survivals 
from an earlier feudal period. These survivals, were 
more marked and, in some ways, more repressive of 
economic development than in France. Serfdom still 
existed to a considerable extent and restrictions involved 
in the gild system, combined with restrictions on the 
ownership of land, created an almost caste-like division 
of society. 

Noble estates could be held only by nobles, persons of 
civic origin being able to acquire them only by express 
permission of the sovereign ; in the same way peasant 
land could, as a rule, be held only by peasants, and town 
land only by citizens of the town. 



I 



LECTURE XIV. 

THE INDUSTRIAL REVOLUTION: CAUSES. 

ICnci.axd. 

TovNisEK, Housox, lli:i.i), Cuxnin(;ham (also Politics 
and Economics), Giubixs, and Prothero, as in previous 
lectures. Li':ck\- W. E. H. A History of England in 
the Eighteenth Century (Ch. XXIII). Wai.holk S. 
A History of England from the Conclusion of the Creat 
War in 1815, Vol. I. Tavi.or W. C. Introduction to 
a History of the Eactory System ; Ehe Modern Factory 
System. Jf.voxs W. S. The Coal Question. WuK.iir 
C. D. The Eactory System (Tenth Census of L^ S., 
Vol. II.) l^RK A. 'The Cotton Manufacture of Creat 
Britain; The Philosophy of Manufactures (eds. 1861). 
Baines E. Jr. History of the Cotton Manufacture in 
Great Britain. Scrivexor H. A Comprehensive His- 
tory of the Tvn 'Trade. Swaxk J. M. Tvn in All 
Ages (the same in briefer form in the Tenth Census of 
the U. S., Vol. II). BiscHoFF J. A. A Comprehensive 
History of the Woollen and Worsted Manufactures. 
SMir,E.s S. Tulustrial Biography Mron Workers and 
Tool Makers ; Josiah Wedgeioood ; Tives of Ton I to// 
and Watt; Tives of the Engineers ; Men of Invention 
and Industry. 

h'RAXCE. 

vox Svi!i:l, as in pre\ious lecture. 

Prussia. 

SEEr.E^•, as m ])revious lecture. Pt. III. Ch. IV., Pt.\' . 
Ch. I. Pr()i;\ X J. W. (l'',(l.) Systems if hand I'euui-e 
in I \irious C ountries. 



See also articles on land tenui'c and trade corpoi'ations 
in the Economic liucycli>p(Cdias, mentioned in the Cen- 
eral Reference list. 



S6 Industrial Revolution. 

V^)X the abolition of feudal tenuies in other countries 

see Pkobvx as above. Ixckam J. K. Histo/y of 

Slave?-]' ; DoNloL H. La Revolution I'laneaise et La 
lu'odalite. 

(il'AI'.KAL. 

iJinint;- the last half of the eighteenth antl the hrst 
half of the nineteenth centuries there occurred \w the 
])rincii)al lunopean nations changes so fundamental and 
far reaching in the methods and structure of economic 
life that thev ma^■ be regarded as constituting an 
industrial revolution. The causes of this revolution 
fall into two classes: i. ///c/z/.st'/vV?/, including (^r) a 
series of mechanical inventions, involving fundamental 
changes in manufacturing and mining processes; (/-') 
improvements in agricultural processes ; (r) improve- 
ments in the means of transportation. 2. Legislative 
enactments, overthrowing the remains of mediccval 
organization and the prevailing system of governmental 
regulation, and establi.shing the system of individual 
freedom. Both of these classes of causes were every- 
where i:)resent but in different relations and proportions, 
the industrial causes preceding" and predominating in 
I'jigland, the reverse being true on the continent. 

I'^XCI. AM). 

Manufaeturing and Mining. Four essential elements 
closel\- inter-related contributed to revolutionize the 
pi-ocesses and organization of these branches of indus- 
ti"\-. I. Ihe invention of the steam engine, yielding 
tiemendous increase of motive powei", the extended ap- 
pHtMtion of which was rendered possible by the use of 
coal as fuel and iron for structural purposes. 2. The 
increased use of eoal as fuel, I'cndered possible by the 
more successful draining of mines due to the use of the 
steam engine. 3. Increased jiroduction of iron, ren- 
dei'ed i)ossible b)' the production of coal, the steam 
engine, and imj^roxements in methods of treatment. 
4. The in\entiou ot u/ae/iinery, the extended application 



I 



]\fanufactnirs. 



S7 



ot \vhicli was i'cikIciccI possible h\' the use ol iron tor 
structural |)ui"])oses, and of the steam eni;-iiie as a 
motixe power. 

1 he histoi'y ot eaeh of these ini])io\ enients is one of 
t;ratliial _<;To\vth, final suceess beini;- the outeome of 
man)' unsuccessful or partially successful efforts, in 
the case of all, howex'er, decisive ix-sults were reached 
tlurini;- the period 1760-1790. 

St(><nH /uif/iiic: till' (ail.nr(j\Mh of :\ st'rics u\' ;illciii |it> fuaclii n,^;' li;ick 1(. 
Hie lieniiiiiiiis' ol' the scviMitcciil li <-ciiliir\ (SnldiiiMii dc Cmu- . 'I'lic 
rirst eii,aiiie known to Inivc liccn .-n-luallv- i-cmstrnctcil \va> liiiilt in ICd:;. 
An engine, fir.st constructiMl l)y Thomas Savrry in IC.'.IS and in ITn.") ini 
livoved by Ntnvconicn, was uj-ed dniin;:- the early part oT tin- ciulitLH-ntli 
century for draining mines l)ut was too waslidnl oT riicl Tor ucncral use. 
Tlie furtlu'r ini|>rov('mcnts « jiicii vciMlcred tlie eni^-ine senci-ally availa 
able;weri' made l>y James Watt (lir>t patent I7<lll, lintlier iniprox ements 
1774) who increased neatly li\e r(ild llie woi'k done liy the en^-ine with a 
H'lven (■(nisiiiMption ot coal. 

Coal. 'I'll ere is e\ iden<-e that the use ot coal as In el was Unow ii c\ en to 
the Runians in Urilain. but its use remained very limited until tlu' 
eighteenth ceni ui-> . 'i'he reason> tor I his weie its disagreeable snicdxc 
(led even to legislative ref;trictiini- (oi its use), the dilliculiy ot Ueepin^■ 
the mines free from wtiter, and the iini)()ssi))llity of .uetting a strong 
enough Idast to make il availalile tor working iron. The lirsl obstacle 
was overcome by the growing scarcil\ id' wood and the oIImm's by the 
invention ottlie steam engine. 

Iron. Theuninngand smelting (d' iron (by means id' charcoal ) was a 
nourislling industry in the seventeenth ceidur\ . particulai'l\ in Sussex. 
r>y the eighteenth centiir>, howe\ cr, the ,-carcit> ot wood liad checUed. 
and was e\ en causing a tailing olt. in the industry. 'I' he llrst >uccessl ul 
a|)plicatiou of coal (<'oke) in the production of iron \\a>inadel)> .\bra 
hum Darby in I7l:i (I7.S5:-'). ^\'ith the improvement oltlu' steam engine. 
rendering possible a more powertid blast, this process became incieas 
liigly |)ra("ticable, and the invention by Cort of a nie.ms for rolling iron 
into bars by machinery (17S:!), and tor converting]iig iion into malleable 
by means ot i)uddling (17S-t), rendered po.-sible a production correspond 
iiig to the new needs. 

Mdchinerij. The lirsl im])ortant macliine brought into use in lOn.uland 
wasprobablv the stoidxing frame invented liy William I.ee in the leign 
of Klizabeth. Macliinery tor throwing silk was const ru-tcd on Italian 
models by John l.onibc in 171s. and an e\tensi\e silk laclory creeled . 
The first extemled use of machinery, however, took place in connection 
with the mannfactnres of cotton and wool. In the earlv iiart oi the 
eighteenth century the snpi)ly of yarn does not seem to have fieen sulli 
cient to meet the demand id' the weavers. This nn^adjiislnient was 
increased by Kay's invention of the. ^(.// .'(/(Vi/i/K (17:!!^) which douliled the 
l)roductive (jower of the weaver (applied lirst in the woolliii iiidusir\ ami 
transferred to cotton about 17(i(l). The effort to increase the spinning 
resulted (17(i4) in the invention of the /'r»//// {lor cotton) usuall.v allri- 
buted to Uargreaves (wlio i)atented it in 1770' liy which several threads 
coiild be si>un at once. It was, however, available onlv for lilling. 
In 1769 Arkwright patented his vulcr fniiin'. a s|>innin^ m.achine re 
(juiring the use of water or steam power, but litti'd for -pinning cotton 



8S Airricitltnir. 



w;!!-)!, thus I'lnaiiciiiMtinii- the I'ottiiii Ironi tlic linen hnliistvv. 'I'liis \\;i> 
Idlliiwi'il liy iin|)riivt'iiu'nts in •■iirdimj, iind li> (_ runipton's invcntidn ot 
llic mute. (177")-177!t) wliii'ii entirely siipersodeii tlie .ie'i"y ;iiul even lor ;i 
time tlie water I'rMnie. 'riiis r^cries of inveiitioiifi cau'-ed spinning to out- 
run weaving; Tlie balance was restored, and the cotton nianul'acture 
established on tlie general lines which have been maintained ever 
since, by Cartright's invention of tlie /?o(fcc too/« (U.'^o). Tlie last ot the 
great inventions was the cdttDii. i/hi of Kli Whitney (I7'.I4) which ensured 
a sullic.iciit suiii)ly of the raw material at a moderate cost. 
I nvcniiiin in the textile industries was typical of what, liy the inidillc 
ol the iireseiit ctntiiiy. had taken ]ilace in all bianrhes ot industry, 
though the rate development was in imist branches le>s raiiid. 

Ai^-j-/c-////;//r. Dunni;- the sccoiul c|uartcr of the eigh- 
teentli centur\', Chai'les Townshend introthiced tlie 
s)-,stem of alternating' tuiiiips and clover with cereals in 
'A four yeais' rotation, tliereb)' (hminishini;' the amount of 
tallow, maintaining" the fertilit^■ of the soil, and render- 
ing i)ossil)le the maintenanee of a larger iiirmher of cat- 
tle which in tinai enriched the soil, l^akewell (1725- 
1794) introduced .sv7V//////r ,v/(^(;-/' breeding iov pur{X)ses 
ot tood. The o[)[)ortunities for proht opened up by 
these improxements led about 1770 to a re\i\al of the 
enclosure mo\'ement and to the de\'eloi)ment of a class 
of capitalist farmers managing their farms as profit earn- 
ing enterjM'ises.'on the scientific principles developed by 
cUi increasing number of scientific agriculturalists 
(Arthur ^'oung. ) 

'■So late as 17U4 it is calculated that, of ^,'M) i)ari,slies, 4,o(l(l were cxcn 
llieii still fai'nied in cominon " (I'rothero |). oO.) Between 17(;t) and l.sju, 
;>.-.'()'.t enclosure a<'ts were jiassed ami more than (i, -.'(Mi, Odd acres enclosed. 
(Ibid.-r)7). 

Means of Connnnnieation and I ransportation. All 
through the eighteenth centur\' (particularly in the last 
tpiarter, ) and in the earl)' part ot the present centur^■, 
there' weix' great impi'o\-ements in the construction 
(Macatlam 1815) and maintenance of roads (turnpike 
SNStem, 452 bills for the inn;)ro\'ement of roads in tlie 
first fourteen sessions under deorge ill). l'A|uall\ im- 
portant, |)erha})s, was the rapid extension of canal con- 
strnction, and the impro\-ements in biadge Iniildmg 
(I^rindley, Telford). 

The lirst canal (7 miles" of imporlancc. coiinecLing the DiiUc of I'.ridge 
water's coal mincsal Worslex with Manchester was oiiened in I7(d and 



() 



Legislation. 89 

WHS hiliT cMfiitlfil Id the :Mcis('> lirin.uiiii;- MiinclK'slcr iiiUi (•(iniK't-litm 
with l.iveriiiiol. \\\ ITItd Lonitoii. Hristol, Livcriioiil, .-iiul Hull wcrt 
(•(iiiiH'i-tcil l)v internal water Cdinnuinicatioii and in the same yeai- 
canal connecliuii was establishuil between the Clyde and tlie Forth, 
r.elore the eonmieneeinent of the i-ailway ei-a -i.liOh miles of navi,u-al)le 
canals had been constructed in Eiiiiland, -.'Tf; miles in Ireland and -J-i.") 
miles in Scotland. The amount of capital invested was about 
t;.">o.i»U().iMiO. So coni|ilete was the system of canals in coiidiin.-ition 
with the fixers that it was said that no place in Knuland south of 
Durham was more than llfteen miles renioxed from w atei- transporta 
lion. 

Lcoislatioii. The chanj^'c from ^-oxernnicntal reL;'ula- 
tion to the s\'stem of incHxichuil libcrt}' in l^^ngland took 
l)hice to a great e.xtent throu<;-h a g-radual rela.vation 
in the enforcement of statutes, which finally became 
ibsolete, the ]e>;-islative repeal, when it came, merely 
registering an already accomplished fact. This, taken 
in connection with the fact that rei)eal was largely 
piecemeal, directed to the removal of particular abuses, 
renders it difficult to trace in legislation the break-up of 
the existing system. The following will, however, ser\ e 
as an outline. The regulations as to the qualit}- of 
woollen cloths were in large |)art repealed in 1 809 ; the 
assize of bread was abolished for London in 1815 ; the 
East India trade was thrown open to all British subjects 
in 1 81 3 antl their exclusive ]M-ivileges were withdrawn 
from the South Sea Company (18 1 5), the Levant Com- 
])any (1825, and the African Company (1821); the pro- 
visions of the Statute of .Apprentices in regard to the 
regulation of wages b\- the justices were repealed in 
181 3, the apprenticeship clauses a year later, and the 
remainder of the statute in 1824; the |)r()hibition of the 
emigration of artisans was repealed in 1824 and the 
combination laws (forbidding all combinations of laborers 
for shortening hours or raising wages. .Such laws, 
special and general, had been passed from time to time 
since Henry VI and were revised and-extended in 1799 
and 1800) in 1825 ; ^ere was a formal abolition of gild 
privileges in 1835, and in 1834 the laws of settlement 
were remodelled, m connection with the new poor law, 
so as to gi\'e greater freedom of moxement to labor. 
The culmination of the movement towards remo\'al of 



90 France. 

legislative rcsti'iclions is lOund in the legislation ol 
1842-1849 which re|jealed the corn laws and navigation 
acts and established I'Jigiish trade on a practically free 
trade basis. 

Economic doctrine. The best exposition of the changed 
views in regard to economic life and policy, which both 
reflected the new dexelopment of industrial life and 
guided legislative action is found in Adam Smith's 
Inquiry into the Xatiirc and Causes of the Wealth of 
Xatious (1776) which maintains the harmony of inter- 
ests between the indixidual and the nation, from which 
it follows that individual self-interest is the safest guide 
in economic matters and that the government, in order 
to give full play to this fundamental f(jrce in economic 
life, should, with few excejotions, confine its operations 
to [protecting the nation from external attacks, adminis- 
tering justice, and maintaining certain public works and 
iiistitutions which it would not be for the interest of in- 
dividuals to maintain ( Iik. I\' last ])art of ch. IX). 
I-'k Axci:. 

The strictlv industi'ial features of the economic revolu- 
tion were largeh' borrowed from luigiand and pku'ed a 
minor part until the i)eace of Kurojie was finally estab- 
lished, llie legislative features were one element in the 
general political revolution and shared its abru))! and 
radical character. The decrees of August 4, 1789, de- 
clared the abolition of feudal dues, the abolition of the 
trade corporations and the freedom of industry. Iliese 
principles wcix- carried out in the legislation of 1791. 
The old tlivision into provinces was broken down, and, 
with it, the barriers to internal trade disap])eared. 'i'hus 
by a single stroke, as it were, the svstem of individual 
liberty took the place of the svstem of regulation in 
the internal industiial life of the nation. As regards 
foreign conuuerce the piinciple of legulation (prc^tective) 
has never been abandoned though sometimes modified 
in the tlirection of freedom. 

All I'Milicr .■illciM|il 1(1 i|iiiiini>li ui'N fiiinictit;il n'niil.-itioii Ii.'mI Iiccii 
iiiMilc li\ 'I'uriiot. wild, ill ITTtl, sfciUL'il llic ciiii-cnt ul lliu Kiiii;- to 



P/y/ss/n. 9 1 

lU'creCfi ;ili()lisliiiii; tradi' (-(iriioi'iitiims, tlie corvee Mini noveniiiiontiil 
legiilatioii ol tlie uraiii tnide. Tlie fiiends nl the estnlilislieil iirdei- 
were, liowMner, sullieienlly stroiin' to secure tlie aiiiiuliueiit ol the 
decrees witliin a lew nioiiths. 

Ill its anxiety to estal)lish industry on an individualistic l)asis the 
national assenil)!}' went so far as to prohiliit all associations ol 
laborers, employers or merchants, or ol' those who followed the same 
tiadc. Tlioiifth not strictlx' enforced, for the most iiart, this law was 
not repealed until 1S!^4. 

As in Knuland there was a school ol economists {I'ltjinincrats) whose 
teacliinj^s rellected and lurlhcred the new order, hut in Frame the 
doctrine of v/ttural rif/lifs played a much more important part in 
leuislation than considerations of economic e\pe<liency. 

Pklssia. 

The industrial element was still later in makini;- itself 
felt than in I^' ranee. The lei;"islati\'e polic)' was less 
\'i()lent and destructive than in h^'ance ; more s\s- 
tematic and influential than in En_ii;land. The moxinj;- 
spirits of the reform were Stein and Hardenberg. 
The first step was the ^Y/Zr/ of Octobci- (^, 1807, which 
{li) abolished restrictions on the acquisition and sale of 
landed propeit)' ; [b] jx-rmitted the noble, without 
derogation to his rank, to exercise the trades and call- 
ings of a burgher, the burgher to become peasant, and 
the ])easant, burgher, (r) granted greater freedom in 
leasing landed property ; {d) provided for the extinction 
or consolidation of peasant holdings where the)' were 
not proi)erl)' maintained ; (c) abolished \illainage after 
Martinmas 1810, but not the obligations connected with 
holding of land. 

The succeeding legislation falls into two parts, i. That 
dealing with agrarian questions ; 2. That dealing with 
manufactures and trade. 

Agrarian. This reform was finall)' worked out by a 
series of measures, dating from 181 1 to 1850, (some 
reactionary measures) the fundamental principles of 
which w'ere i. conversion of cultivators into peasant 
l)roprietors ; 2. compensation to former owners for 
dues and services ; 3. free trade in land. The means 
adopted were redemption of dues and sei-\'ices in land 
or their conversion into a money rent redeemable in 
41 I -1 2 or 56 1-12 years. 



92 Pn/ssin. 

Matiufacturcs mid trade. The first intimation of a new 
policy is seen in a letter of instructions, to administra- 
tive officers, laying clown principles and suiiporting them 
by reasoning strictly in accoixlance with the doctrines 
(jf Adam Smith. An edict of 1810 ])racticall}- abolishctl 
the trade privileges of the gilds and established the 
principle of freedom (subject to police regulation) in the 
choice and pursuit of a trade, except in a few trades 
where regulation was regarded as particularly necessar)' 
in the interest of the public, (apothecaries, jewelers, 
masons, mill-wrights, chimnc}' sweeps, ship-carpenters, 
makers of surgical instruments, carpenters). The ter- 
ritories acquired after 181 5 were allowed to retain their 
own regulations until 1845 when a uniform s\stem in 
accordance with the ])rincii)les of the edict 1810 was es- 
tablished. In 1849 a reactionai-y measure was j^assed in 
the interest of the hand-workers as against the factor}' 
s\'stem. Fhis act does not seem to have been strictl\' 
enforced and in 1869 was superseded b)' an act of the 
North (ierman Confederation, going be)()nd the act of 
1845111 the direction of fix-edom, which is the basis of 
the existing law. 

Tli<)u,i;li shoMi of tlieir trade nioiioply iki attempt was made to siii)i)i-css 
the uilds, indeed tlieircontimiancc was encouraged, a.s mutual benefit 

associations and as insti-uments in tlie police reuulation of trades. 

Like France, (iermany has never abandoned the 
protective policy as applied to foreign trade. As 
in h' ranee again political unity has brought with it 
the suppression of a mass of hampering restrictions. 

Tlic lirtt ste]! was accomplislied in the establishment of tlie XoUrercin 
I8;J4 ( included 7, "ly S(|Uare miles of territory and a population of 
■23,()()0,()0(») ; the second stci) was the estahlishnient of tlie North German 
Confederation (ISCfi); the tlnnl. tlie estahlisliinent of the (ieriiian 
Kmpire (1S71). 



LECTURES XV.-XVI 



INDUSTRIAL REVOLUTION: RESULTS. 

Cunningham, Hop.son, Gibbins, Protheko, Uke, 

BaINES, BiSCHOFF, SCKIVENOR, SwANK, WklGHT, 

Jevons, Walpole (throug-hout), and Held as in pre- 
vious lecture. Porter (i. R. The Progi-css of the 
Xation. McCulloch J. R. A Statistical Account of 
the British Empire. Lexi L. History of British Coiii- 
vicrcc. Schulze-Gaevernitz G. v. Social Peace; 
The Cotton Trade in England and on the Continent. 
Kngels F. The Condition of the Working-Class in 
England in 1844. Report of the Eactories Inquiry 
Commission, 1833. Report of the Conunissioners on 
Hand-Loom IJraj'ers, 1841. Report of the Children' s 
Employment Commission, 1842-3. Hooder E. TJie 
Life and Work of the Seventh Earl of Shaftesbury. 
Report of the Poor Lau' Commissioners, 1833. Fowle 
1". W. 'J7ie Poor Law, {English Cit. Series). 



Growtii of Population and Increase of Productive 
Power. 
The growth of population, and the increase in produc- 
tive ]M)wer so far as concerns manufacturers, mining, and 
commerce, ma)' be seen from the following table : 



94 



lucirase of l^nuiiictivv J^oi^'cr. 



Year. 


Popula- 
tion 
E. & W. 

(000) 

(J). 


Produc- 
tion ol 
pig iron, 
G. B. 

{■I'c.ns (KIK) 
(C). 


Foreign 

timber 

cons'nied 

in U. K. 

(l.diids (1(«H 
(•T). 


Cotton 

Im- 
ported, 
U K. 

( l.oilds IKKI) 

(.1). 


Coal 

<'on- 

siinied, 

cr.piis (iiiii) 
(e). (.1). 


Wool 
im- 
ported, 
G. B. 

(lbs. 000) 

(B). 


Imports, 
official 

values, 
U. K. 

(•£000) 

'(L). 


Exports, 
official 
values, 
V. K. 

(£000) 

(M). 


1740 




17 














17'!4 








4 (iM) (e) 










1771 










l..S-!l) 






17S1 










.•|,i:5o 






1 7S.T 








18 








1 7SS 




GS 




















8,(iO!l 


28, '2.58 


4:i,l.">2 


ISOl 


0,1 It:! 


•lf^% 


l(!-2 


-A 


10,-22:) 












ISIO 








lO.OSO 


30,802 


42,057 


isii 


io,4(;s 




'270 


!iO 


14,424 




1S'20 




i:^,78(i 
;!2.:il3 


H2,472 


48,845 


1M"'1 


I-Moo 




417 


i:^7 


■2o,;M(; 




1 S-> ;i 


.581 


4(i,:iOO 




is;{() 








(iO 701 


ls;ii 


14,071 




.i4(; 


■27;i 


2S,700 




If^i') 


],-24it 








IK'IO 








.r2. OiiO 


07,403 


110,481 


1841 


10,0.) 1 




745 


4:!7 


40,484 




IS50 




10(1, 4(iO 


107,8111 


lS.il 


18,100 









.")7,107 






ISH 


•2.70(1 (e) 

























(e) Signifies that the figure is siniplj- an estimate. The other letters in 
parenthesis refer to the authors (Jevons, Cunningham, Bisclioff, Levi, 
.AfcCulloch's Dictionary of Commerce), from whom the tigui'cs are 
taken. The other letters i-efer to the territories to which the figures 
apply. 

Statistics showing directly the increase of productive 
power in agriculture are difficult to obtain, but that 
such increase took place is proven by the fact that a 
rapidly increasing population was supported without a 
corresponding increase in the area cultivated, in the 
number of agricultural laborers, or in the imports of 
food products (Prothero, Porter, McCulloch). Porter 
estimates that on the average 10,000 acres would in 



I 



C//(r//^r ill [iidiisti-ial Oro;aiii:::otii>n. 95 

iSoi support 4,327 persons, and, in 1826, 5,555 persons. 

CONCENTKATI()X OF POPL' I.A'IIOX. (ikoWJII Ol' ClTIKS. 

The rate of increase of the total p()i)ulation of iMigiand 
and Wales fi-om 1811-1821 was 18% and from 1821-1831 
16% ; the rates of increase of the principal towns for the 
]3eri()ds in question were 24% and 23%. Many towns 
showed nnieh higher rates ; Manchester 46% and zTli<y 
Liverpool 26% and 39%, Birmingham 13% and 38'!(i, Leeds 
34% and 47% (McCulloch I, 401-6). 

LXDU.STRI.M. C)K(i.\MZATIOX. 

The changes here were fundamental, i. Licreasing 
separation and interdependence of the various branches 
of industry. 2. Concentration of industry, including 
{a) concentration of industrial enterprises at common 
centres ; {b) concentration of the \arious factors of a 
single enterprise {factory system). 3. Increasing size 
of industrial enterprises. 4. Increasing" specialization 
of labor within each enterprise. 5. Formation of dis- 
tinct economic classes, a result of the fact that each 
indix'idual tended more and more to contribute but one 
among the several factors necessary to production ; 
land owners, capitalists, entrepreneurs, and laborers. 
The dividing lines were, however, much less rigid be- 
tween the first three classes mentioned than between 
these as a grouj:) on the one side and the laborers on the 
other. 6. Increasing importance of the capitalist and 
entrepreneur classes. 7. Subordination of the laboring- 
class as a controlling factor in production. 

y^//the changes as here described took place in con- 
nection with the factory system only, but, in Kngland, 
the growth of production on a large scale, the increased 
importance of the capitalist and entrepreneur, and the 
• loss of independence by the laborers were almost as 
marked in agncultiu'e as in manufactures and mining. 
To the form of industr}^ having the characteiistics just 
mentioned we may apply the term capitalistic system, the 
factory system being one phase of this general form. ( )n 
the continent the capitalistic system has never obtained 
the same predominance, in agriculture, as in h^nglancl. 



96 fiidiistriiil ( h-<^-(n/i:::(rfioii. 

The nature of the change in the laborers' position conies 
out clear!)- when we consider the successive stages 
through which industrial organization has j^assed. 
Under \.\i<t family system, of the early mediaeval period, 
the laborer, though subject to burdensome obligations 
and the restraints of custom, controlled the land and 
capital which he used and was, practically, economically 
independent. In agriculture this system continued 
until it was superseded b)' enclosures and farming, on a 
large scale, for profit. Under \.\\it gild system a number 
of the laborers, the masters, where the directors of 
the industrial enterprises in which they were engaged 
and the owners of the capital which they used ; in the 
smaller towns, where the handicrafts were frec|uently 
combined with agriculture, thev often controlled land 
and enjoyed complete economic independence. The 
remaining j^ortion of the laboiers though not owning 
capital or controlling the enterprises in connection with 
which they labored frequently lived in relations of close 
personal intercourse with their employers, and the 
character of industrial organization was such that any 
laborer could hope to become an independent producer ; 
hindrances in the form of regulations and restrictions 
by the public authorities, or the gilds, existed, but thei"e 
was nothing in the nature of the productive jjrocesses 
to i^revent it. Under the domestic system the great 
mass of laborers lost, in part, the control of the enter- 
prises in which they were engaged ; they frequently 
ceased to own the capital which they used, but agricul- 
ture was, even more frequently than under the gild s)'s- 
tem combined with the handicrafts and this, together 
with the facts that the workers controlled the workshop 
and the power used, that their skill was an important 
element, and that the character of industrial i)rocesses 
was still such that the indixidual could, with a minimum 
of capital, produce on his own account, ensured, at least, 
a position of potential independence to the laborers both 
as individuals and as a class. Under the eapitalistic 
system, however, the laborer controlled none of the pro- 
ductive factors (labor, land, materials, tools, work-place 

% 



I 

I 



I 



hid /IS trial Oiiianiz^atioiL 



97 



or power), except labor, and in the case of the factor)' 
system, the productive processes had become such that 
it was practically impossible for him to acquire control 
of any other factor. He did not even control his hours 
of work which were necessarily regulated b}' the de- 
mands of the other factors. For the great mass of 
laborers also a combination of agriculture with manu- 
factures was no longer possible. The laborers, who con- 
stituted nine-tenths of those actively engaged in indus- 
trial enterprises, had thus become wholly dependent on 
the few who controlled the factors of production other 
than labor power, a dependence which was intensified 
by the relatively large members of the laborers and the 
pressing character of their needs. The control which 
the laborer had lost passed to the entrepreneur and the 
capitalist who were alone capable of setting industry in 
motion, who exercised the directing power, and to whom 
went the gains over and above the stipulated payments 
to other classes. 



We h!\\v spoken ofllie eliaiige in inilu.strial oruaiii/.alion as a levulu 
tioii hut it would be a uiistal^e to supjiose lliat it was aecuniplislied in 
a lew years or even in a lew decades. Alter the expiration of Ark- 
wrigiit's patents in 178.i tlie nuniher of cotton spinning mills gi-ew 
rai)idly (there were said to be, in 1788, 142 mills in England and Scot- 
land employing ■2,600 men, 31,000 women, and 3.i,((0() children) and by 
the end of the lirst ((uartei- of the nineteenth centurj- power spinning 
liad pretty generally supplanted hand spinning in all branches of the 
textile trade in Kngland and Scotland. Flax spinning by hand was 
still i)revalent in Ireland. The power loom was not ))erfected sulli- 
cieiilly to render it practically available until the early jiart of this 
century, and as late as 183.i it liad not been applied to any considerable 
extent outside of the cotton Irade and even there the hand loom 
weavers were two or three times as numerous as the power loom 
weavers. 

Power looms employed in textile manulai'tures 18;5,) (Porter i-240). 





COTTON. 


WOOLLEN. 


SILK. 


FLAX. 


.MIXED 
GOODS. 


Kngland 


90,679 

17, .531 

1,416 

109,626 


."),105 


1,714 


41 

1 168 
100 


2.1 














United Kingdom . . 


5,127 


1,714 


309 

1 


25 



98 • Transition Phase 



The minibcr of liaiul loom weavei-s was cstiiiijUA'd at from -ioo.iMKi lo 
•JoO.OOd (Porter I--M,><). The making of i^lockinirs was still carrieil on 
entirely under the domestic system, (lie workers icnting their frames 
from the inanufacttirers: in the lace manufacture hand ma<liine> 
were still very nuich more numerous than power machines. 
The hardware manufacturei- of Biimingham (iresenled about INS.") a 
most interesting transition phase in which the introduction of power 
machinery tended to break ui> ratliei- than develop the capitalistic 
form of production. It is thus described by Portei- (I--2!I8). "A build- 
ing, containing a great number of rooms of various sizes, is furnished 
with a steam engine, working shaft-i from which are placed in each 
apartment or workshop, which is likewise fui'uished with a lathe, 
benches, and such other conveniences as are suited to various of the 
branches of manufacture for which the rooms are likely to be needed. 
When a workman Ims received an order for the supply of such a 
nuaiitity of goods as will occupy him a week, or a month, or an\ 
other given time for their comitletion, he hires one or more of these 
rooms of sizes and with conveniences suited to his particular wants, 
sii])ulating foi- the use of a certain amount of steam power. * * * 
liefore the introttuclion of this system, llie trade of Birmingham was 
for the most part' carried on by men of large capital, who employed 
journeymen, and gave a considerable credit to the merchants who 
dealt with tliem. At pi-esent, those merchants themselves employ the 
workmen, who can give no credit, but receive payment in ready 
money at tlie end of every week for such part of their goods as they 
can then deliver in a finished state." "Tlierc were but few large 
capitals employed in the manufactures of Birmingiiani," (McCulloch, 
I, (iiJS). A large part of the work was stillcarried on in the homes of tlie 
workers. Nails were still made by hand in the outlying district.* 
.iround Hirniingham, women lieing frecjuently employed in the work. 
(Ibiil. (i! IS, 700). " l?ut few, comparatively of the She Hi eld nuinuliicturers 
have large capitals; and the business is not so generally carried on in 
worksl'.ops or factories as in Birmingham. A person worth a few 
shillings may commence business on his own account as a cutter; and, 
ill this class, indiviiluals are not unfrenuently journeymen one year 
and master another, and conversely." (Il)id. 7(14). The factory system 
had already made considerable progress in the jiottery and paper 
industiies, but even today independent iiroducers are common in some 
branches of tiade ami the sweating system is a survival of the domestic 
ill its wiirst form. 



Kl^'b'ECT Ol' THl': IXDL'.STKI.VL R KNOLL TK)X OX Till-: KCUXUMIC 

Well-Being of the Lahokek.s. 

It is ini])()i'tant to dl.stinguish here between i. effects 
attributable to the new .system ; 2. local and temporary 
effects attributable to the difficulties of transition from 
one .system to another; 3. effects attributable to non- 
industrial causes, such as war and legislation. 
Manufactures. It is probably safe to say that, as re- 
gards men, the conditions under the new system were 
better than under the old, unless it was with respect to 



llcoiioviic Effects. 99 

the intensit)' of the work, safety, and the loss of the re- 
source against absolute want which existed when the 
laborer could combine agriculture with his handicraft ; 
earning power was apparently increased, work was more 
regular and steady, (exception should perhaj^s be made 
of factories run by water power), hours were gradually 
shortened (though' there was probably considerable 
irregularity as between different factories) and there is 
no reason to believe that the condition under which 
work was carried on was on the whole more unhealth)- 
than under the domestic system. The local and tem- 
porary cjfccts \\<txQ. in man)' instances most harmful. In- 
dustry moved away from the southern and eastern coun- 
ties to the sources of supply for coal and iron, but the 
population could not move and felt the effects in loss of 
employment. The labor driven out by the introduction 
of machinery in one branch of manufacture tended to 
concentrate in those branches where hand labor still 
prevailed {c. g. weaving in the textile trades) ; for a time 
the increased demand for labor in these branches en- 
abled the workers to earn high wages, but the increase 
in numbers, the exportation of the products of the fac- 
tories, and the gradual introduction of machinery into 
the branches which had been the last resort of the 
handworkers reduced the latter to a most wretched con- 
dition. 

As regards women and children, though we cannot, 
perhaps say, with certainty, that the conditions were, on 
the whole, worse under new than under the old system, 
it is certainly true that factory labor is in many respects 
injurious to these classes, especially for married women, 
and that the e\'il effects were greatly aggravated b}' the 
conditions (as to working time, sanitary arrangements, 
etc.) which prevailed just before the middle of this cen- 
tury, instances of outrageous abuses not being infre- 
quent. 



lOO 



Mine 'Labor. 



Tal)le sliowinjr the adults ami cliililreii ilivi<lt'(l accKidinj'- to sex, 
eiiiployeil in textile lactoi-ies in the Fniteil Kinj;<l()iii (1SS4':') McCulloch 

r, (>a<{. 





^H 


rears. 


12-13 


years. 


13-18 . 


-ears. 


Above 18 vs. 


Tot 


al. 




i 

s 


m 
a) 

E 


0) 


1 


S 




2 




S 




Cotton 


4,328 

•2,4S1 

•2,4S6 

59-2 


3,669 

•2,283 

3,925 

(524 


10,663 

4,290 

952 

1,782 


9,911 
4,268 
1,711 
2,290 

18.180 


27,251 
10,138 
2,636 
3,4.')7 

43.482 


38,23.1 
11,112 
6,815 
8,.Vi4 


58,0.53 
20,.568 
4,114 
4,564 


67,824 


100,495 


119,636 


Silk 

Flax 


8,043 
11,410 

103,411 


10,188 
10,395 

1.55.3.55 


20,494 

22,888 






Total 


10,087 


10,501 


17.687 


64,726 


87.299 


196,S18 



Milling. The new industrial .system involved a more 
than proportionate increase in the number of laborers 
engaged in mining, one of the hardest, most dangerous 
and brutalizing branches of industry. This in itself 
was an evil, but, further than this, women and children 
came to be employed in underground mine work under 
conditions which it would seem must have been far 
worse than anything which could ha\'e existed under 
the earlier .system. 



Table showinj; laborer.s (elassilied according t(i aye and sex) en- 
gaged in Mining-, as given in the Census of 1841. 



Coal Mines . . 
Copper^^Mines 
Lead Mines.. 
Iron Mines. . . 
Tin .Mines. . . 
Not Siiecilied 

Total... 



137,398 



Men over 
20 Years. 


Men under 
20 Years. 


83,408 




32,475 


9,861; 




3,428 


9,427 




1,9:!2 


7,733 




2,679 


4.602 




1,349 


24,162 




6, .591 



Women over Women under 
20 Years. 20 Years. 



1,185 

!)13 
40 
424 

68 



3,102 



1,165 

1,200 

20 

82 
491 



f 



Geneva I Social Effects. loi 

Agyicultur c. Here again it is impossible to make exact 
statements. There is however no doubt, i. That the 
rapid progress of enclosures proved a serious injur}-, per- 
haps in the majority of cases, to the small holders who 
were, thereby, frequently reduced to the class of mere 
laborers. 2. That the change in the character and lo- 
cation of manufacturing industries inflicted a permanent 
injury on the agricultural laborers in the very districts 
where they had hitherto been most prosperous. 
Cje.xeral Social Ep^fect.s of the Industrial Revolution. 
In addition to the strictly economic effects of the new 
system it is necessary to notice certain more general re- 
sults the reaction of which 011 economic life has been of 
great importance, i. 1 he increased tendency to con- 
centration in cities with the resulting evils of over 
crowding, bad sanitary conditions, and the increased 
tendenc}' to certain forms of vice naturally springing 
from these conditions. 2. The tendency to the de- 
struction of family life resulting from the separation of 
the workshop from the home, and from the labor of wo- 
men and children in factories. 3. A growing insta- 
bility of social conditions, the natural result of the break 
up of a long established system and of the improved 
means of communication. 

Many of the worst evils attributed to the new system 
showed themselves in connection with these tendencies 
i"ather than in economic conditions proper. 

C()\rKIHL'T()K\- CaUSE.S. 

During the period of the industrial re\olution there 
were at work a considerable number of influences, in 
addition to those already considered, which had impor- 
tant economic results and modified to a considerable ex- 
tent the results properly attributable to the change of 
industrial system, i. War, necessitating a great in- 
crease in taxation, and interfering directly with com- 
merce. 2. The suspension of specie payments (1797- 
1819) resulting in a general rise of prices. 3. A series 
of bad harvests at the end of the eighteenth century, 



102 Co7itribiitory Causes. 

and restrictions on the importation of grain resulting 
both from war and from legislation. 4. Lax methods 
of poor relief ; excessive out-door relief, grants in propor- 
tion to size of family, grants in addition to wages. 





Average Price 

of Wheat 

per quarter. 

6. d. 


National 
Revenue. 

£000,000. 


Poor Rate. 

£000,000. 


1748-50 

1760-69 

1762 

1770-79 

1780-89 

1783-85 

1790-99 

1795 

1800 






- 


45 10 






6.7 




45 
• 45 9 










1.9 


.55 11 






19.7 




110 5 


33. 









180S 






4 


1810 

1810-19 

1812 


103 3 

88 8 






6.7 


1815 
18-20 




71.9 
.53.9 


5.7 


58 5 




1825 


.52.1 
49.9 




5.9 


1830 




fi.S 


1830-35 
1 835 


54 7 


i 


45.9 
47.4 
51.7 
.52.2 


4 7 


1840 
1845 
1850 




4 8 





5. 







Nummary of Results. 103 

Conclusion. 

Reviewing the course of events as a whole it is safe to 
say. I. The new system rendered possible the support 
of a larger population in a better manner than before. 
2. Until about the middle of this centur}' the gain in 
productive power was, for the laboring classes, largely, 
and in some cases more than counter-balanced by their 
loss of independence, the evils peculiar to the new sys- 
tem, the evils incident to a rapid transition froin one 
system to another, and the evils resulting from a num- 
ber of disturbing causes acting contemporaneously with 
the industrial chanires. 



LECTURES XVII.-XVII 



ECONOMIC DEVELOPHENT SINCE 1850. 

HoBSON, Swank, Wright, Gibbins, Schulze-Gaever- 
NiTZ, Taylor, Levi and Hodder as in previous lecture. 
Wells D. A. Recent Economic Changes. Rand B. 
Selections Illnstrating Economic Progress since tin- 
Seven Years War. Ward T. H. Reign of Q?tecn 
Victoi'ia. WooLSEY T. D. and others. The First Cen- 
tury of the Republic ( U. S.). First Annual Report of the 
(U. S.) Commissioner of Labor (Shows the increased 
productive power due to machinery). Tenth Census of 
U. S., Vols. II. {Matiufactures). III. (Agj-iculture). IV. 
( Transportation). Wright C. D. Industrial E-oolu- 
tion of the {U.S.). Hadlev A. T. Railroad Transpor- 
tation (Chs. I-II). FoviLLE A. DE. La Transforma- 
tion cies Moyens de Ti-ansport et ses Consecjuences Eco- 
nomiques et Sociales. Lindsay W. S. Lii story of Mer- 
chant Shipping and Ancient Commerce (Vol. IV.) 
GiFFEN R. The Groiuth of Capital; the Progress op tin- 
Working Classes in the Last Fifty Years (in his Essays 
on Finance, Second Series). Report of Committee on 
Finance of the U. S. Senate on Wholesale Prices, Wages, 



to4 Continuation of Existing Tendencies. 

and Transportation (the most complete collection of sta- 
tistics on the subjects treated, covering the years 1849- 
1891). MuLHALL M. G. Dictionary of Statistics (con- 
tains a mass of material illustration the progress of the 
last fifty years, but is not always reliable). Jeans J. S. 
Trusts, Pools, and Corners, von Halle E. Trusts or 
Industrial Combinations in the U. S. Howell G. 
Conflicts of Capital and Labour. Webb S. and B. P. 
The History of Trade Utiiotiisui. Trant W. Trades 
Unions. Ely R. X . 'The Labor Moveuicnt in America. 
Third Annual Report of the (U. S.) Commissioner of 
Labor (Strikes and Eockouts ) Bulletin of the Depart- 
ment of Labor. (U. S.) No. \. (Strikes in U. S., G. B., 
Erance, Italy and Austria.) Cooke-Tavlok R. W. 
The Factory System and the Factory Acts. Jevon.s 
VV. S. 'The State in Relation to Labor. \'ON Plenkr 
E. E. TJie English Facfory Legislation. Second Special 
Report of the (U. S.) Commissioner of Labor (Eabor 
Laws of U, S.). Fourth Special Report of (U. S.) 
Commissioner of Labor (compulsory insurance in Ger- 
many). Leroy-Beaulieu p. E Etat Moderne et ses 
Fonctions. Cunningham W. Politics and Economics, 
Bk. H. (A Summary of recent legislation in England.) 



Continued Development Along Existing Linb.s. 

The same forces which produced the industrial revolu- 
tion have continued to act with ever increasing strength; 
machinery has been more and more perfected, has sup- 
planted hand labor in one branch of manufactures after 
another, and about the middle of this century began to 
be successfully applied to agriculture ; the results of 
science, especially of chemistry, have been applied as 
never before to the improvement of industrial processes 
( Bessemer process of steel manufacture, improved fer- 
tilizers etc.). 

Development of the Mea.ns of Transportation and Com- 
munication. 

The application of steam to transportation by land and 



I 



Transportation and Communication. 



105 



I 



sea, the use of electricity for the transfer of messages, 
the invention of the printing press and the shortening 
of routes of traffic (Suez Canal) have brought all parts 
of the civilized world into closer connection with each 
other than were the counties of England a century ago. 

The development o( the modern steam railway system began with 
tl)e opening of the Stockton and Darlington road in September, 1825, 
the engine used being built by George Stephenson. There were in- 
stances of boats propelled by machinery as early as the end 
of the last century, but no considerable development of steam 
navigation before the second quarter of this century. A railway 
across the Isthmus of Panama has been in operation since 1855. The 
Suez Canal, shortening the ilistance from England to Bombay l)y 
nearly one half, was opened in 1869. The modern postal system dates 
from the reform by Rowland Hill in 1837, and the development of the 
meiins of transportation. The first telegraph line was openeii in 
England in 1839. Telegraphic connection between Europe and 
Ameiica was first established in 1858 but was not made permanent 
until 18G5. There are at present about I'io, 000 miles of submarine cable. 
The telephone began to come into general use about 1877. Printing 
by power machinery began in 1814. 

















Length of R'ways 
Kilometers. 


Tonnage of 
Ocean Ships. 




Length of 
Teleg. lines 


Telegrams 
sent. 


Foreign 
Trade 




(000.) 


All countries. 


Letters 
sent 

(UUO.OOO.) 


(000.) , 


(0<J0,0O0.) 


(000,000.) 














All 














Eur. 


U.S. 


All 
coun- 
tries. 


Steam. 


Sail. 


all 
c'ntries 


coun- 
tries 
Kilo- 
ni'ers 


(4) 
U.S. 
Miles 


All 
coun- 
tries. 


(4) 
U.S. 


G. B. 

£ 


U.S. 


1820 
1840 
1845 
1860 
1865 
1866 
1873 
1875 
1880 
1885 








6.2 


3,165.6 




















97. 


4,556.2 
















9.2 


7.5 


16.7 












(;i) 


219.2 

687.2 


764 6 


10,712. 




126 1 




8 9 




375 


75.6 


56 5 


145. 






2,300 


178.1 


37 4 


20 9 








(■■J) 
5.9 
















3 300 












143.2 


119.7 


296. 


........ 

4,436.8 


....... 

13,650. 




336.9 
415 


72.8 


79. 


17.2 


655.6 


1,153.7 


195.6 


206.5 


488. 






.596. 


147.5 


117.5 


42.1 


642.4 


L319 7 


1887 
1892 












5 800 


652. 




148.2 








232 7 


281.9 


657.4 














1893 








10.783.3 


10,4.50.9 






189.9 




66.6 


681.8 


1,714 















(1)1879. (2)1867. (3)1854. (4) These figures are for the Western Union Com- 
pany only. In 1894 the total mileage exceeded 210,000. 



io6 



Extension of tJie Neiv Sy stent. 



(The greater part of these figures are taken from the Ubersicliieii <ler 
Weltwlrtschdft, Jahrgang, 18S5-18S9, edited by vou Juraschek. The 
tigures in regard to telegraph lines and messages, and the foreign 
trade of the U. S. are from the Statistical Abstract of the U. S., 1894. 
The figures for the foreign trade of Great Britain are from Levi's 
History of British Commerce, except for the years 1885 and 1893, 
wliich are from the Statesman's Year-Book, 1895.) 

In 1894 there were 838 telephone exchanges in the United States, there 
were 560,491 instruments in use, and the connections made averaged 
1.871,067 daily. 

The developenieut of transportation sj'Stems has 1 een accompanied 
hy A great reduction in freight cliargcs. The following figures (from 
report of senate finance committee) show the average charge (in cents) 
per ton, ])cr mile, for the years and by the roads named: B. &A. 
1868, 2.81; 1892, 1.00. Fitchburg, 1852, 3.12; 1892, .925. N. Y. Cen., 18.io, 
3.02; 1892, .7. N. Y., N. H. & H., 1856. 3.80; 1892, 1.756. Penn., 1852. 
.1.42; 1892, .647. C. M. & St. P., 1861, 3.34; 1892, 1.026. C. & O., 1858, 6.04; 
1891, .525. According to the Statistical Abstract of the U. S. for 1894, 
the average freight cliarges(in cents) per bushel of wheat from Chicago 
to New York ivere as follows for the years and by the routes mentioned ; 
l.y lake and canal, 18.i7, 25.29; 1894, 4.44: )>y lake and rail, 1868, 29; 1894, 
7; by all rail, 1868, 42.6; 1894, 12.88. According to the report of the 
senate committee, ocean freight rates on wlieat from N. Y to Liver- 
pool showed a tendency to rise from 1866 to the early part of 1875. 
Fiom that date there was a tendency to fall. The highest and lowest 
rates (in cents per bushel) quoted by the committee for 1873 were 27 
and 11; for 1892, 9 and ZU. 

A clear indication of t'le extent to which obstacles to free intercourse, 
imposed by distance and national differences, have been overcome 
is seen in the increasing international movement of population. 
Immigration into the U. S. has been as follows (000,000 omitted). 



1821-30 1 

1831-40 6 

1841-50 1.7 



1851-60 2.6 

1861-70 2.3 

1871-80 2.8 



1881-90. . . . 
1881-94.... 



Total, 



The emigration from the German Empire from 1871-88 was 1,769,297; 
from Great Britain, 18.53-88, it was 6,650,0.55 of which 2,710,084 was from 
Ireland. Of the population of the U. S. in 1890, over one- 
seveuth were foreign born and one-third were of foreign parentage. 

Results. Expansion of the Industrial Area. Repetition and 
Intensification, on a zvor/d sea/e, of the tendencies of the 
preceding period in England. The increase of pro- 
ducti\'e power and population which was ah'eady so 
marked in England at the beginning of the century has 
spread throughout the world of western civilization, as 
a result not onl}' of the introduction in one country 
after another of the new methods of production, but 
also of the expansion of the industrial area. 



I 



r 



Grozvth of Population and Production. 



107 



The rapid exp!iii.sion of the U. S. may be seen from the following 
table : 



Year 



1790 
1800 
1810- 
1820 



Settled 

area 

(2 or more 

to .sq. mile). 

sq. miles 

(000) 



229.9 
305.7 
407.9 
508.7 



1830 
1840 
1850 
1860 



Settled 
area. 



Ini- 
pioved 
land. 
Acres 

(000,000) 



632.7 

807.3 

979.2 

1,194.8 



Wheal 
land. 
Acreb. 

(000,000; 



113. 
163.1 



(1) 
11 



Wheat 

pro 
duced. 
Bush. 

(000,000) 



100.5 
173.1 



Year, 



1870 
1880 
1890 



Set- Ini- 

tled prv'd 

Area . land . 



1272.2 188.9 
1569.6 288.8 

1947.3 357.6 



Wh't 



IWh't 



-'^•d^d 



.. .J 287.7 
35.4 , 459.5 
33.6 468.4 



The figures are talien fiom the eleventh census of the U. S. except (1) 
which is from the seventh census. 

The increase of population and of productive power , as indicatt d by (lie 
quanliiies of some of the most important raw materials produced and 
used, is shown In the following table : 







POPULATION (000,000.) 




Coal Iron 
\5r0duced produce . 
metr. tns. Kilograms. 

(000,000) ! _ (000,000) 


(13) 
Cotton 


Year. 


Germ. 


(1) 
Fr. 


(1) 
E.&A'. 


Austr 


Belg. 


Italy. 


U.S. 


produced 
lbs. 

(OOO.OOO) 


1820 


26.3 
29.5 
.32.8 
.35.4 
37.7 
40.8 
45.2 
49.4 


30.5 
32.6 
34.2 
35.8 
.36.7 
36.1 

38.3 


12. 
13.9 
15.9 
17.9 

20. 
22.7 
26. 
29. 




'(4) 
3.8 


(T) 
19.8 


9.6 
12.9 
17. 
23.2 
31.4 
38.6 
50,2 
62.6 






1830 






IS40 


1 

■> 900 


940 2 


1 850 


136. . 7,.360 
(12) 
260. 12,095 

345. , 18,385 

514.1 i 27,332 


1,482.9 
1,265.2 
2,609.9 
3,61.5.7 
4,013.2 


1860 
1S70 
ISSO 
18110 


■ •2) 
18-2 
(3) 
20.4 

22.1 

23 .9 


4.7 

(5) 
5.5 

(0) 
6.1 


(S) 
25. 

(9) 
26.8 
(10) 

28.4 

(H) 
30.3 



(I) The figures are for 1821, 1831, etc. (2), 1857. (3), 1869. (4), 1831. 
(.5), 1879. (6), 1891. (7), 1812. (8), 1861. (9), 1871. <10), 1879. (11), 
.1891. (12), 1871. (13), the figures represent annual averages for five 
year periods beginning 1841, 1851, etc., to 1881. The last figure in 
the colun)n is the annual average 1886-9. 

The population figures are from the Jahrh. f. K. <t- S. Dritte FoUje 
IV; for coal and iron fi'om the Uhersichten d. ireWwvX. 188.5-89; for 
cotton from the report of the U. S. Sec. of .^gr.. 1890. 



io8 Industry Orgaiii::cd on Wor/d Basis. 

The significance of national boundaries as marking in- 
dependent economic areas has greatly diminished. I'he 
technical and local separation of the different branches 
of industry and the consequent interdependence of 
classes and localities for the necessaries of life and 
industry has been established on an international basis. 
The tendency to concentration of population and manu- 
facturing industries in cities, encouraged by the im- 
proved means of transportation, has been growing con- 
stantly stronger. The importance of the capitalist and 
the entrepreneur has greatly increased, the barrier be- 
tween these classes and the laborers becoming strongei". 
The size of establishments has been increasing, the 
division of labor growing more minute, and, though 
the laborers have shared in the progress made, as is 
shown b)' increased wages, shorter hours, impro\'ed con 
ditions of work and life, and larger opportunities foi' 
education, the individual has been constantly diminish- 
ing in importance and independence. 

'I'he introduction oj'tlie neiv methods of product i or,, hiis been acconi|ilisli(l 
with very dilt'eieut degrees of rapidity and completeness in different 
countries. 

Asiegards the rehitive importance of tlie factory and dome.^tic sys- 
tems, German}' in 1SS2 was in much the same position as England in 
183.5. In cotton spinning hand labor was of very small importance, 
but in weaving the small producers still exceeded the factory workers. 
In the textile industries as a whole 42jJ of all workers were working in 
groups of less than five, and only 38^ in enterpiises employing over 
fifty persons. In northern, eastern, and southern Europe the factory 
system is either unknown or of relatively unimportant. All through 
Europe the capitalistic system of farming is an exception. In the 
United States, on the other hand, the application of machinery has 
prt)ceeded with great rapidity and in some diiections has been even 
more complete than in P^ugland, the best examples of capitali-ili(\ 
farming witli the aid of ma(;hinery being found in this country. The 
same tendency to the rapid extension of the capitalistic system is to 
be found in all countries colonized by Englishmen, and even in India. 
The most marked expannion of industrial area has taken place in con- 
nection with the settlement of the central and western portion of the 
U. S. Since the middle of this century, large portions of South 
America, South Africa, and Australia, liave been opened up and 
brought into clo-e connection with the most advanced industrial 
nations. Further than tliis the increased fre(iuency and regularity ol 
intercour.'^e have brought the Asiatic nations into nuH^h more intimate 
relations with the economic life of Europe and North America, thus, 
a result practically equivalent to an extension of their economic area. 



I 



Increased Sirje of Rsfablislniicnts 



109 



The increase (if iiio(lijcti\ c powei- as well ,i~ llic ieiulcnry toinirfh 
larf]e,r csttihUahiiientx in llii' cotton iiiihisir\ can he -ecu liom the 
accompanying tabic : 



Great Bkitain. 



United States. 



is:;:!. 

KKtal)lii<lnnenf-; l,l.'il -i.iiTl 

Spindles ((((ui) ;).:«:; :!'.(,.v.'7.!i 

Looms (OOd) I(i(( .-,14. '.I 

l';mi>loyfcs ((100) ■.>;!7 4S-J.'.l 

Cotton used, lbs. (000,000). 2(;-.>.7 l,4:i'.i.4 




•.>,.-):!s 




sol 


1,00.-) 


4:;,.504.s 


1 


■.'-i(;.7 


10,7i:i.7 


(;i.").7 




;!:!.4 


•220.S 


.Vi8.S 




:u.r, 


1S4.S 






77.0 


7()'.i.7 



The above table is compileii from the tenth ami eleventh U. S. cen- 
suses ami the Vhersiclifeu iter ir<'lf.wirf!<i-linr/ . 

>Iany striking illustrations of the increase of proiluclive jiower can be 
I'ouiul in Schtil/.e-(iaevci-nit/. (Cotton Tnidej ami Kd. Atkinson's His- 
tribntion of Products. The pi'ice of a iiounilof No. 4(iyai-n in Euirland 
in 177!l was Kis., the price of the cotton necessary to make the same Js., 
difterence Us. The corresponding ligures for ls:>0 were N. -.".d.. 
TVii., O'ld.": for J8!»-J, 7 Vd., 4".,d.. Jv.d. Hetwocn 18-2'.l-:!l and 1nso-S2 llie 
product in yarn loi- each laborer increased between three and four- 
fold, notwithstanding a reiluction in Morking lime of ihiiteen or 
more hours per week. In tlie same time and umler llic same con- 
ditions the amount of clolli woven jier laboi'er increased nearly 
eight-fold. 

That these tendencies have not licen conlined to any special branch 
of trade i.s shown by the following table, which aiijilies to manufactui-- 
ing industry, a.s a whole, in the United States. 



Years. 


Kstaldish- 
ments. 


Eniiiloyees. 
000 


Capital. 

000,000 


Jraterials. 
000,000 


Pro<luct. 

$ 
000,000 


ls.-)0. 


12;!,02.-) 


0.i7 


3;;;{.2 


.-),V). 1 


l.OI'.l.l 


lSf.0. 


140,4:!:! 


l.:;il.2 


1,000.0 


i.o:;i.(; 


1,880.0 


1S70. 


2.")2.14S 


2.0.14 


2,1IS.2 


2,4SS.4 


4.2;:2.:! 


isso. 


2.-):!..-)02 


2,700.7 


2,7S0.S . 


;!.Ho;^.o 


.-),:;4'.i.2 


ISild. 


.■!22,n;)8 


4,470.0 


(;, 1:50.4 


.-,,02,..-. 


o.o.-)(;.8 



The ligures are taken from the T'^. S. census reports for 1880 (Compen- 
dium, iip.028.;^l)and I8OO (.Mislrai't )). IMi). The a|iparenl great increase 
in t)ie numberof establishments in Isoo is due to a more coin|ilete enu- 
meration of iirodueers not organized on the factory plan, c. ;/. masDns. 
carpenters. ])lumbers, gas litters, dress makers, milliners, who had 
been entirely or partially omitled in the enumeration of manufiictures 
in )>reviou8 censuses. ."Many of the principal iiuluslries showed, in is'.io, 
.'i decrease in the numberof establishments, with incrt'ase in number 
of laborers, aumunt of c.apit.al, and ((uantity of nialerials worked up, 



I 10 



[iitcru'itioiitl C haractcr of Iiidnstry. 



In soiiiu instaiu-c~ Illi^i was very iiKirki'd. T!i(; lUiuilitT nf i'>t;il!lisVi- 
luunts lor the iiiaiiuructiiier of a.micultural iinpleineiits ilecreased lie- 
tween ISSd and IWM) from 1,!)4:{ to '.(10; the number of euii)loyees increased 
from ;W.580 to -f-i.."i44 : the value of the product from $(;S,(i40,4Sfi, to 
$8t},27J,0.")l. Auioiiu- other niiiiuifactures showing the same tendencies, 
though in less uunked de^free were cariJCts, chemicals, clay and 
pottery, Hour, foundry i>roducts, furniture, giass. hardwari'. iron and 
steel, li((iior, lumber, iiaper, saddlerx and harnesses, salt, sihcrwarc. 
wire, and woollen goods. 

Af/7-iculture. The average si/.c of farms in the L". >. as sliown li> 
successive censuses has been as follows; l.'^.">0, 20;! acres; 1S(;0, I'.i'.l acres: 
ISTO, 1.53 acres; 18S0, 1:!4. acres; IfiiK), 187 acres. The most rapid incI•ea^c 
l>etween 18S0 and ISliO was in farms of .'lOO-loOd acres. In the faiiiiing 
states between the Mississiiipi and the Rocky Mountains llicre was be 
tween 18S0 and i8!IOa more oi- less marked tendency to an increase in the 
average size of farms and a large increase in farms id the l.iriiesi si/i', 
.iOO-lOOO acres and 1000 acres and over (Abstract of census of ISlio, jip. 
00-0.">). 

The interniitioiKil clKiriirter of iiii/asfri/ nia\- be ilhisiralcd in a variety 
of ways. From 18.V2-ii the average prodiu^tion of wlu-at in the VJnited 
Kingdom, deduction made of the amount necessary for seed, was 
l;i,lo0,0()0 tpiarlers, the imimrts for lujnie consumption were 4,()5o,000 
quarters. The corresponding ligures for I8i<'.) 1)0 were 8, 770,001) and 
H),'2(i8,OO0. In 18<)8 the United Kingdom imported aliout one fourteenth 
of its meat supply, in 18;i0 about one-third. Among raw materials 
Great Britain imports all her cotton and silk and two-thirds of lier 
wool. The mauufaclure of cotton employs over .'inii.oiio workers; 
wool over oOO,000; silk over 40,ooo,ooo. 

Giffeu {Essai/ in Finance, Sec. Series. ]>. J04) estimated in Is,s2 the 
Knglish capital invested abroad at X l..")00,000.ooo. 

.\nother indication is seen in the growth of international trade. 
The following figures show the total imports and exports of the United 
States and the Uniteil Kingdom, in ndllions of dollars and pounds 
respectively, for the years given : 





1845. 
•21!) 


1854. 

535 
268 


1860. 


1870. 


1880. 


1890. 


1894. 


Unitei 
Unitei 


.States 


(>87 
37.") 


8-2<) 
.547 


1,504 

(;!)8 


1,047 
740 


1,547 
083 







The less rapid iucrease between 1880 and 1800 and the falling olf since 
1800 were due largely to falling prices aggravateil in the latter case by 
severe industrial depression. Nenmann-Spallait ( r^cr.s/c/f^ (/. Ifelt- 
vrirt. 1883-4) estimated the international commerce of the world in 
1867-8 at 44,-214,000,000 marks, and in Iss.". at (;i,(;ii:;,oi)0,(iiiO marks. 
T\\<i tendencii of population Ui <itn<entr(it<- in cities is mai'ked in every 
country which has felt the effects of the new industrial methods. The 
followiug flgui'es show the i>crceiitage of urlian to total poimlation in 
tVie countries and foi' tlic years named : 

England AND Wai.e.s. (1.) Gkumanv. (3.) 

1861 62.3 1867 35.5 

1871 64.8 1875 30. 

1881 66.6 1885 43.7 

1891 71.7 J890 47. 



p 

I 



ll'<n>rs and 1 loiii 



1 1 1 



FRAX(^E. (2.) 

1S4() ■24.4-2 

!(<()() :i0.4(; 

issi; s").!).') 



Uniteu Statks. (4.) 

1790 3.35 

1S,50 12.4!) 

If^'.Kl 29.-2() 



(1) Ilobson, p. o2(). (2) Mayo-Siiiith, Statisiic.s and Sociologij, p. .'iOT. 
(if) 1><67-1885, Wagnei- GruiuUegung d. polit. Oek. Erster Theilfx^. '>\)\, 
1890, Statesman's Yearbook 1895. (4) Mayo-Smitli, p. 368. 
Ttie dividing: line between nrban and rural population is by no means 
uniform in the different countries. On the continent of Europe settle- 
ments ol' 2,000 and more are usually counted as urban; in England the 
l)()pulation of the urban sanitary distri(;ts is treated as urban; in the 
llnited States the figures apply to incorporated villages and towns of 
8000 and over. In 1890 30.28 $? of the population of the United States 
lived in towns of 2,500 and over. In 1790 there were in the United 
states six cities wit h a i>opulation of 800 or more, the largest being I'hil 
adeli)liia with 42,.520; in 1890 there were 448 such cities, three of which 
liad a i)opulation of over 1,000,000 each. Concentration is mostmarkeil 
i7i England among the larger states. In 1891 one-fifth of tiie poiiulatioii 
of England and Wales lived in the " Greater London," 14 5'; in "Minoi- 
Jyondon " and 22;,' in cities of 2.50,000 aud over. As a rule the larger 
(though not the largest) cities have everywhere been increasing more 
rapidly than the smaller. 

The most comiilete investigation of wa-fjex, lioiira oi'htbor and in-lccs 
is to l)e found in the Report of the U. S. Senate Committee on Finance 
(Maich o, 1893) on U'liolexale Prices, Wages and Transportation. Tak- 
ing the year 1860 as a standard and i-epresenting by 100 the average 
wages for that year, in the industi'ies fpi'i'iC'ipi'Hy nianufacturiug aud 
1 ranspovtation) covered by the investigation, the wages for 1846 M'ould 
l)c represented by H7.7 (82.5"): for 1891 by 160.7 (168.6), the figures out- 
side the parenthesis l)eing based on simple averages, those within the 
))arenthesis being based on averages in which allowance is made for 
ilie various degrees of impcjrtance of the different industries. The 
<-hanges in wages and hours in some of the more important industries 
are shown in the following table. Column 1 shows the rate of wages 
in 1891 as compared with 1860 which is taken as 100; columns 2 ami :! 
show the hours of labor in 1860 and 1891 respectively, 



iNDUSTltlES, 1 

Agi-ic. Implements. .. 137.9 

I'.oilding Trades 172..") 

Cily Wiii-ks im.O 

Colldn (ioo<ls l(i."i.l 

Leather l.'.T.d 



Industries. 



10. 10. Metals anil Metallic (loods 

10. ;t. Lumber 

10.4 9.3 il'aper^ 

12,2 10. jHailroads 

11. 111. Woollen Goods .. 



1 


2 


148.6 


10.1 


177.9 


10 8 


182.3 


12. 


146.4 


10. 


167.8 


12.7 



10.1 
10. 
12. 

10. 
10. 



In some industries the investigation goes back to 1840 at which date 
wages wei-e almost without exception lower than in 1860 and hours in 
some instances considerably longer; cotton goods 14 hours, lumber 12 
huuis. In is.'iiiihe imui-s lor woollen goods were 14, Similar facts as 
regards wages may be lound for England in Giffen's essay mentioned 
above, anil lor various countries in Principles of Social Economij by 
Ives Guyot. and Les Sn/aires an 19 Sii'clc by Chevalier and Levasseur. 



1 12 



f.abor of IWn/zci/ aud Cliildi-cii. 



A l)i-iel' accoutit of the teiulcncy towards shorter hours iiiiiy l)e 
found in Eiaht Hours for Work by John Kae, eh. I. and 'I'hv Eight 
/{ours Dan by S. Webb and H. Cox. <di. II. 

The etlect ol tlie changes on the ecommuc well bcinu- ol' the laborers 
can be estimated only when considered in connection witli a great 
variety of other fact?, (lariicularly prices, (juality of |ii-oducts and 
steadiness of emidoyment. The last mentioned will be considere<l 
later. Concerninir the second our knowledge is very limited. As 
regards yjrfces we have statistics, covering a considerable period, for 
wholesale prices only, which have shown a general tendency to fall 
lliroughont the present century with the exception of the third quarter. 
Tliis fall has been most msirked in the case of manufactured products, 
less marked or not present in the case of food products and building 
materials. The investigation of the senate committee showed the 
following level of prices in IS!)1, as (compared with lf<(iO, the prices nf 
the latter year being taken as lOn. (Report Pt. I. p. +>(.) 



Kiiod 

( loths and clothing... 

Fuel and light 

.Metals and implemeiil- 



Total 



.1(1.!. II Lumber and b'ld'g materials. . IJ-.'.:! 

. si.l Drugs and chemicals'. st;.:; 

Ill, House furnishing gooils To. I 

. 74. ;i Miscellaneous 'm.\ 



'.i-J, 



The most important item omitted from these statistics is rent. Treat- 
ing tiiis and other omitted items as (constant and the variation in retail 
prices as proportional to those in wholesale prices, and taking account 
of the relative importance of different classes of commodities in the 
expenditures of workiiigmen tlie cost of living in isd'.' was ;h;.-.' ,is 
compared with 100 in IWiO. 

'V\\e cmp/oi/iiieiU oj' ivdiiic.ii and rliiUlren. According to the lollowing 
ligures (taken from the a i tide .iHiicudUche Arheiter in thv //iindir'li. 
d. Staatsiviss.) which appiv to the principal textile industries the 
number ofchildro*i under thirteen years of age employed underwent 
a rapid increase both absolutely ami relatively between 1K')() and IST.i, 
followed by an almost ecjual decrease between 1ST,') and LS'JO. Ifecent 
inxestigations on soinewliat different lines would seem to indicate that 
llic proportion of the iioiiulation between ten and lifteen \ears of age 
engaged in industry had considerably increased between 18.^1 and isui 
though it is not cpiite clear whether these results ai)ply to the whole 
population or only to cities nf .')(), OOO and over , /lu//. oi' tlie Dep/.ot' 
Lalior No. 1.) The table applies to Great Britain. 



187,1 



Children under 1:5. 

Males, i:i-l8 

Males over Is 

Females over 18. . . 

Total 



Number 




Number 




Numlier 




IHMI 




(100 




(10(1 




4().S 




1-24. 8 


IJ.s 


m;..'i 


>. 


t;7.s 


li.i; 


7S4 


,s. 


SS . 7 


S.-J . 


K ;."..'.! 


•-•s.:! 


•J.Vi.4 


■20.-J 


■ios.s 


"27.(') 


:!l-J.i 


.-..!.- 


.M.i.4 


.V.'.ll 


oio.i; 


.")(; ;; 


.').8(;.(i 


lOtl. 


074. 


100. 


1,0.84.0 


100. 



A^rio Dc'i'clopuinit.s 



II"> 



The facts in re,nai-<l U\ tlie lalmr oT wdiiumi \wv shown in the lollowini;- 
table taken Ifoni HoUnnn,. p. -21)1, who bases it upon a study by Cliaiies 
Booth. Tlie lijiiires are in thousands and cover the leading- Englisli 
iiiamifiictures in which men and women are emidoyed : 





IS41. 


1S51. 

1, :!■-'(, J 
ll'.lT.li 


1S61. 


1871. 


1881. 

l,401.!l 


1891. 


Men 


i,o;!i».(; 

4t)3.H 


i,;;.-.7.-2 
i.i.'iii.i 


I,3S.-,..-) 
l,-2o;!-.> 


I.."i7(;.l 


\\dnien 


1,447..") 



'I'lie most marked increases in the emiil(»yment of women liave l;iUcn 
lihice in tlie textile (and dyeinn) and clothing' industries: in the loimci- 
the li^ures tor ISll were .Uri.-iuii men. •2.'>7.()()0 women ; tor ISIM, 430..)(M» 
men. .KS-i.tiOO women: in the latler tor 1841, 348.(j0(» men, 177, -2(10 women: 
lor IS'.ll. 3,");j,8()0 men, (;sl,.!Ou women. The investigation above reteried 
to would seem to show, howexer, that the i)ro|>ortion ot women 
einiiloyed in industry to the I'emale i>oiiulalii>n ten years of age and 
over had diminished t>etween issi and 1S!)1. 

The tacts for tlie United States, so far as it is iKjssihle lo obtain them 
are shown in the following table(^-'o;/(/)<'»f/. of Tenth C'eiistis./iji. irjSS/) 
The ligures show the numbers of the various classes employed in 
manufactures in the years given (doo omitted). 



M.-iles above 1(1 years.. 
Females ab<ne !."> year: 
Children and youths... 



1S.")II. 


1860. 


1870. 


7:!l.i 


1,040.;; 


i.iii.i.t; 


•2-2.-..(l 


•270. '.1 


.">'2.!.S 
114.(i 



1880. 



Xczi' Developments. In addition to rhe results ahoxc 
noted which are a further development of results 
ah"ead^' well marked I^efore 1850, there exist in modern 
economic life certain tendencies which did not attain 
anything like their ])resent importance until after that 
date. I. Tlie e red it systeui and the joint stoek prineiple 
in indnstrial oro-a)ii:zation. We ha\'e pre\iousi\' noted 
the beginnings of both of these factors in economic 
life, but during the last hft)- )-ears they have become t)f 
fundamental importance. It is hardly too much to sa}- 
that all industry is carried on b)' means of credit and 
that all large enterprises are in the hands of joint stock 
companies. Each has increased, immensel)', pro(hicti\ e 
power by rendering possible a more complete use of the 
wealth and savings of the community. This has been 



{ 14 Credit Systnii. 

done in two ways: i, by making available, through 
aggregation, small sa\ings which b}' themselves would 
have been comparativel}' useless for productive purposes : 
2, by rendering possible enterprises requiring an inxest- 
ment of wealth too great for a single individual or e\'en 
for a small grou}) of mdividuals. The extended oppor. 
tunit}' for the use of wealth thereb}' opened up has jjeen 
in turn the strongest inducement to the accumulation of 
wealth and to savdng. Credit, through the econom)' in 
the use of mone)' which it has effected by means c^f bills 
of exchange, drafts, checks and clearing houses, has 
also facilitated the exchange as much as the production 
of wealth. 

Accurate :~t;itiBti('s as to all tonus of wealth are, peihapft: an iiiipossi- 
l)ility, but it lias been estimated by good authority that the aniouut of 
indebtedness in the United States in ]>Si»() was at least .•if'2(),-J-2T,170,54ti, 
nearly one-third ol the estimated wealth of the couiiti'X'. (Hull, of the 
1')ei>t. <if Labor, No. 1.) The items compriseil in this estimate are as 
follows (0(1(1,(100 omitted) : 

llai Iroad Cos o,(;(iii.4 Real Estate Mortgages i;.(il!(.7 

St. Railway Cos is.'.-- Ci-op liens and chattel mort- 

Telephone Cos '). gages T.iO. 

Telegraph Cos JH. Loans by banks (notinclud 

Water Cos. (not owiud by ing real estate mortgages) :{,(»77.1 

municipalities) s'.i.l other ])rivate indebtedness.!, ■212.7 

Gas Cos 7."). Taxes I,()4(i..") 

Klectnc Light it J'ower Cos. i:>. Public l)('lir> 2,057.2 

Tiansportatiou Cos. (other 
than those previously spe- 
cified) IU.2 

Tlie extent to which the saving of small sums in a foiin axailnblc 
for Industrial purposes has developed can be judged from tin' 
statistics of savings banks and buUdiny loan (tssociations. The lirst 
savings bank in this country was chartered lu Boston in IfiK). lu ISSO the 
ileposits in all the savings banks of the country amounted to $o,i)2:!,.'{04 : 
in lS.i0 to *43,295,904; in 1874-.) to $>s4i),o>si,(j33; in 1893-4 to $l,747,9(il,2Nl 
belonging to 4,777,687 depositors, making the average dejiosits S3(;;).8(;. 
'I'he first building loan association so far as known was st.jirted in 1831 ; 
a report of the U. S. Commissioner of Labor in 1894 gives returns from 
o..')98 such associations, existing about Jan. 1, 1893, in which the dues 
paid in on shares in force and the jirolils on the same, amounted 
t<i s4.i(i,67(i,o94. 

The economy in the use of monc'i/ elfected by the credit system is illus- 
trated by the following facts: The total imports and exports of 
merchandise for the United States during thei)eriod 1880-9 amounted to 
.* 14,429,674,504, the total imports of gold and silvei' coin and bullion to 
.•^1,020,974,983. In 1892 the drafts drawn by national banks in this 
country amounted $12, 994, 9ij9,o90. On September 15 of the same year 
the receipts of national banks amounted to $331,205,213, of M'hieh 



i 



Joint Stock Companies. 1 1 



'.tl.61^ was ill cixMlit iTistruiiieuts of vaiioiit: kinds. In the same yeai- 
indel)te(liic'ss lo tlio amount of $(il,01T,SH!),(>()7 was settled through the 
<'leariiiK housos ot tlie United States by the use of only about 8^ of 
that amount in money for tlie settlement of lialances. In the New 
York clearinj; house no coin and less than $8(10,()(H),()()0 in (;oin certill- 
cates was used to settle indebtedness to the amount of *o(;,-27'.l,!)(C).-':i(i. 
tl{ei>t. of the Comptroner of the Currency, IH'.t'J). 

A joint stocl,- lompiini/ or coriioratioii. Hi* it \!^ usually termed in this 
rountry, is a lej:;al entity distinct from the groTip of persons wlio con- 
trol il. It is given the right to issue shares which confer upon their 
owners the right to a voice in the management and to a proportionate 
share in the property and earnings of the corporation. Tlie important 
l)oints to notice are : 1. That the life of the corporalioii is <-ontlnu- 
ous and not dependent on the lives of the individuals who ina.v, for 
the time being, own its shares; -2. That the shares being issued tor 
small amounts (seldom over $100 ea<',h), transferable, and imposing on 
the owner no responsibility or only a limited resiionsibility foi' the 
debts of the cor|)oration, they offer oi)portuiiities for the inveslinent 
of small savings and for a scattering of investments b.v persons ol' 
large means, thus ful filling, in iiroduclion, a lunctimi analogous to that 
of credit. 

i\loie than .'iO,00(l joint stock comi>anies with liniitccl lialiility were or- 
ganized under the general law in Kngland bet ween isi;:; and IM(0, 2, 7(1'.) 
being organized in the last-named year. There are almost no statistics 
4)t coriiorations in the United States, but tluii-e is no doubt that the 
growth of this form of organization has been as rapid as, or even more 
rapid than, in anv other country. In l.sss, .?,(i,s'.l corporations were or- 
ganized in thirteen states. The Massachusetts censuses of lS7."i and 
ISS.T (Ixxiii) showed the following results as regards the manul.'ic- 
tures of the stale. 

I'rivate firms. 

Partners, 

Ave. No. of partners to linn. 

Corporations, 

Stockholders, 

-\ve. No. of stockholders to corp., 

Tlie caplcal stock of corporations in Massachusetts in 1 SS.") was $l."<'2,- 
.ifio.Ofi,'), the estimated value of capital invested in all manufactures, 
$500 .594,377. 

The capital stock of the railroads in the United Slates in ISiSO was 
:?'2,<ii;$,60(),2(54; number of shaieholders, about 300, 000; the average per 
capita value of shares held, about $8,700. The capital stock of the 
national banks In 18ii4 was .'667'2,()7 1,365, represented by 7,955,070 1-3 
shares, owned by 287, 84-2 shareholders, making an average of about 
.<?-2,337 each. 

2. Conibi)iations of Capitalists and Laborers. This 
tciidcnc)', thoug'h the natural outgTowth of the con- 
ditions ah'eatly considered, is, on the, scale on which it 
now' exists, a i)racticall}' new develo[)nient within the 
last thirty years. 

Capitalists. The tendenc)' to combination has shown 
itself in two main ways. i. The actual consolidation 



IS75. 


1885. 


10,395 


22,482 


15,733 


28,294 


1. 5 1 


1.20 


520 


949 


20, 05s 


42,731 


50.11 


45.o;; 



I [6 Combinatiojis of Capitcxlists and Laborers. 

of enterprises. This is sti'ictlv a continuation of 
the. tendency to prothiction on a lar^e scale and 
has l^een most marked in connection with sucli 
enterprises as rail\va)s, the telegraph, the tele- 
phone, lighting', water supply, etc. It is the most per- 
manent form which combination can take and once 
accomplished is seldom undone. 2. Combination for 
securing a harmonious management of different enter- 
prises, without actual consolidation of such enterprises. 
'Hiis may take various foi-ms. (a) .Agreements foi" the 
purp(_)se of regulating |:)rices, [)r(Kluction, di\-ision of 
business, dealings with labor organizations, etc. Such 
agreements ma)' be of all degrees of strength, either 
without penalties oi- with \'ery severe j^enalties for 
^■iolation. {h) The owners of several different enter- 
}.)rises ma}', without destroying the identit\' of such 
entei'i_)rises place in the hands of a delegated bod\' suffi- 
cient power to enable it to enforce harmou)' of action 
on the part of all the enter[)rises coucerned. The best 
example of this is the trust in which the shareholders 
of the corporations concei'ued, surrender, for certain 
purposes, their shares to trustees, recei\"ing in return 
the certificates of such trustees, {c) A group of capital- 
ists or a corporation ma\' lease, or secui'e a controlling 
interest in a nuniber of corpoiations, thus beuig able 
to enforce a comnion polic}' without actuall)' consoli- 
dating the different enterprises. 

Laborers. Accompan3'ing the combinations of capi- 
talists, jxu'tly as effect and partly as cause, and like it 
growing naturall}' out ot niodei'u indirsti'ial conditions, 
thei'C has been a marked increase since the middle ol 
this centui'}' in the number and power of labor organi- 
zations, which assume to repi'csent the laborer in his 
relations with his emplo)er, and fo compel a sacrifice of 
individual inclinations in the interests of the labor 
group. 

The withdrawal of governmental I'cgulation has, there- 
fore, at least partiall3\ failed in establishing the e.xijccted 
I'egime of competition and indixidual freedoni of action. 



I 



I 



I 



Loinbinations of Capitalists. 



U7 



Perhaps the best illustration of the teiulciicy to coiisoriilation and 
o.ombiaatioii is seen in our railway system. The railways in the older 
portions of the country were originally, almost without exci-jHion, local 
roads and the great i-oads of to-day have been formed by a process of 
consolidation. In 18S0 there were 87,782 miles of railway managed by 
(i31 corporations, but more than one fourth of the mileage and moie 
than two-flfths of the traffic were in the hands of fifteen coujpanles, the 
Chicago, Milwaukee and St. Paul having the longest mileage (8,001). 
In 1894, there were 178,709 mile.s owned by ],9'24 corporations, and over 
one-third of this was under the control of fourteen roads, eacli one of 
which operated over 2,500 miles. 

The immensity of some of these roads and the necessity of the credit 
system, and of the joint stock form of organization, to their existence, 
can be seen from the following figures, even after due allowance has 
l)een made for over capitalization. 



Namk ok Company. 


Allies of Road 
Operated. 


Capital Stock 
i?0O0 


Bonded Debt 

$000. 


A tchison, Topcka i^- Santa t'e 

Southern Pacific 

('hie. Mil. & St. Paul 


(;,4(;i 

."),(ISO 


101,845 

108,2.S2 
72,184 
01 .387 


70.<l7(i 
i;!s,(i3o 

131,00.1 







The above figures are taken froni Unidstreetx', December 7, 1895. 
Further than this, several difl'erent roads are fi-etjueutly controlled liy 
the same group of capitalists, giving rise to what are commonly term- 
ed " systems." Thus there is the Vandfrbilt system, (15,470 miles), the 
Gould system, (9,000 miles), the Pennsylramd system, (7,9.50 miles), the 
Union Pacific system, (8,000 miles). These four comprise over 225C of 
ihe railroad mileage of the country, and it is probably safe to say that 
over one half of this mileage is controlled by w dozen groups of capi 
talists. (The above figures arc taken from Vann Oss American Rail 
roads as Investments) . In England and France, consolidation has been 
even more complete, practically all the railways in each country being 
controlled by some half dozen companies between which there is little 
or no competition. Precisely the same tendencies have shown them- 
selves in connection with the telegraph and e.xpress business. The 
Western Union Company, (capital, $95,.S70,000, bonded debt, *14.848,747) 
controls the great bulk of the telegraph business of the countiy, while 
the express business is divided among a comparatively few great 
companies. The telephone business of the country is controlled by the 
Bell Telephone Comi)any, which, while not itself an operatingcompany, 
owns a majority of the stock in the companies which carry on the 
business. 

The tendency to consolidation is, ))erhaps, even more marked in the 
<'.ase of street railways, electric lighting companies, water conipanies 
and gas companies. Not only is consolidation, or a least division of 
territory within each city, the almost universal rule for each of these 
industries, but it is becoming more and more and more common for a 
single group of capitalists to .acquire the control of a number of enter- 
prises of the same kind in dilfereut cities (street railway syndicates). 
Combinations, more or less permanent and successful, of the kind des 
cribed under 2 la) above exist, or have existed, in almost every braucli 



ii8 



Coinbinatmns of Capitalists. 



of industry. (See list of cuinhiiiatious at the end of v. Halle's Tnists). 
Among the most iinporlantof such combinations have been the s-tcel 
rail combine, tlie antiiracite coal combine (reiuleied ])ossible l)y the 
fact that practically the whole of the anthracite mines now worked in 
the United States, coveriuf,' about 470 square miles in eastern 
I'eunsylvania are controlled by seven railway conipanies which are 
also the carriers of the coal), the envelope combine, the pools and traffic 
agreements between railways, and the ocean steamship couil)ine. 
rhe lirst example of that particular lorm of organization known ar- 
the trust was the Standurd Oil Coiiipamj. A combination of petroleum 
refiners had gained control of this branch of business as early as 1874, 
but the trust form of organization was not adopted until 1882 with a 
capital of $70,000,000 gradually increased, it is stated, to $102,000,000. 
During the next few years this method was used to effect combinations 
in a great variety of imi)ortant indusiries. It proved how ever to pos 
sess elemejits of con8ideral)le weakness from a legal standpoint and 
has within the last few years been generally abandoned forlhe cor 
porate form of organization, tlie combination thereby approaching 
more nearly to a real consolidation. The Staudaril Oil Trust was dis- 
solved in 1892 without the substitution of any formal combination in its 
place, it being generally understood that the trustees of the former 
trust owned a controlling interest in the several enter] irises that foi'med 
the combination, and that therefore practical combination is secured 
without the necessity of formal organization. This brings tlio com 
lunation underclass 2 (c) described above. Some of the most import 
autof the great corporations which seek to control wliolc brancliesof 
manufactures by controlling the separate productive enterprises are as 
follows. 



Name of Ctmi'on.vTKiN. 



Am. Cotton Oil Co 

Am. Sugar Refining < o.... 

.\ni. Tol)acco (,' 

Distilling* ( allle Fecdiii 

General Electric Cd 

National Lead C< 

National Linseed Oil(o.. 

National Starch (;o 

United States Cordage Co. 
United States Leatlier Co.. 
United States Rubber Co.. 



Comniiin Si 

^11(10, 


ock 


I'refeiied Slock 

fSOOO. 


20,2.'?7.1 




lo.Uis.c, 


.".7..')0(i. 




;!7,."iiio. 


17.11110. 




ll,n:i-). 


:U,17l.."i 






:;o,4tlii. 




i 


14,>.(il.">.4 




14,904. i 


IS. 000. 






4.4.i0.7 




ri.(;7ii 1 


I7,9!)2.S 


1) 


i:i,:ill.7 
(;o,0(»o. 


20,l(i(i. 




19,40(1..-) 



ISonikil Deiit 

*000. 



:!,o()8. 



.■;,ono. 

4..MI0. 
0.294.. 
C, 0(1(1. 



(1) Not all issued. The above figures are taken fruiii lirtuhtreet's. 
December 7, lS9,i. 

The capitalization of all of these corporations as above sliown is far in 
excess of the money paid in by the sharehohlers or the cost of the plants 
controlled. In many cases the latter is supposed to be covered by the 
l)onded debt and the preferred stock. ; In addition to the references 
filreaciy given bearing on couibinations of capitalists see Baker, C. W.' 



I 



I 



C ON/bn/tJl/oi/s of Lnhorci'S. 119 



Monopolica iiiid tliv /'<'i>p/<' : AiulrcHS E. B. Trusts ticcordiay Ui ojjiciul 
Jnrestiffiiflon, Quart. .I(»U7-ii. of Ecoiinniics HI ; Jenks, J. \\ ., Develop 
ineiit a/ the irhiskei/ Trust, I'ol. Sc. Quart. JV, Trusts in the If. S., Ec. 
.louni. If., Cainffi/islif yfonopolies, I'ol. Sc. Quart. IX. A full l)ibli 
ograpliy will be found in v. Halle's Trusts, which also contains reprints 
of many documents of great value.) 

Labor Combinations. These combinations have, for the most part, 
developed in the same branches of industry as the combinations of 
capitalists. England. More or less permanent associations of laborers 
for the inaintainance of their interests against their employers existed 
in Englanil even in the eighteenth century, and their number probabl\ 
increased rather than diminished during the period of legal repres 
siou. The first considerable development, however, took place after 
the modification of the combination laws in 1824 and 18-25. The first 
national association, comprising workers in all departments of a great 
industry (machine manufacture) was organized in 1851 under the title 
of "The Amalgamated Society of Engineers." The trades unions 
were granted a legal standing in 186'.). The number of trades unionists 
in the United Kingdom, in IS'j-2, according to official returns, was 
l,.>07,0-2(j; in England 1,221,141. United States. The development of 
labor unions on a large scale did not begin until about 1850 and was 
seriously interrupted by the war so that the greater part of their 
giowth has taken place sin(;e that time. There ai-e no official statistics 
of trades unions as in England, but in 189;J the membership of the 
national unions connected with the American Federation of Labor 
was returned as 610,200. Taking into consideration the national 
organizations notaffllitated with this body and the various independent 
local unions it is, perha|>s, safe to sa.v that the trades unionists in this 
country number about l,0(ii),000. Among the larger national organiza- 
tions connected with the Federation of Labor are those of the bric-k- 
layers and stone masons (32,000), carpentei-s and joiners ;57,0f)0), cigar 
makers (29,000), miners (20,000), locomotive engineers (.■!1,000), locomo 
five firemen (20,000), iron moulders (2!),H00), iron and steel workers, 
(34,000), machinists (20,000), printers (37,100), trainmen (25,000). The 
figures are from the Tribune Almanac, 1894, pp. 282-3. The Knights of 
Labor, intended as a national organization of all classes of laborers, 
which at one time nunil)ered several hundred thousand members, has 
diminished rapidly during late years, the niembership for 1892 being 
fi4,0()0 {rrih Al.. 1SU4). 

3- Conflicts bctzoccti Employers and Employees. Di.s 
putes between these two classes have, doubtless, 
e.xisted ever since the distinction between them arose, 
but with the growth of combination on both sides there 
has developed, in place of the personal and local disputes 
of earlier periods, a species of warfare between organized 
forces, frequentl}- involving thousands of men and 
millions of dollars' worth of productive property, affect- 
ing the industrial life of a whole nation, and seriously 
endangering the public peace. 



120 Strike's lUiii Lockouts. 

The following figures are taken fruin llie Bulletin of the Department oj 
Labor, (U. S.,) Xo. I. They refer to Viviteil States, Jan. 1 , ISSl-.Iuly 1, 1SU4. 
Number of Strikes, 14,8!)(i. 

Number of E-itabli!<hnieuts involv(Ml, H'.(, h;7. 

Average duration of strikes, (days), ■i.').-! 

Employees thrown out of employment, .■'.,714,4(Mi. 

Wages lost, .l!lG:i,807,s(i(;. 

Contributions by laljor organization-;. .f 10,914,406. 

Loss to employers. §82,.i90,386. 

In addition to the above there were, during the period given, lockouts 
involving (5,067 establislniieuts, throwing out of employment 366,690 
laborers, causing a loss to laborers of $-26,685,516, to employers of $l-i, 
235,451, calling forth ^-2,. 524,298 in contributions from labor organiza 
tions, and lasting, on the average, 47.6 daye. 

United Kinc/dom. During the years 1S89-1S9.-! there were 4,.526 strikes 
and 113 lockouts. The number of laborers affected by 3,428 of the 
strikes lor wliich the facts were obtained was 1,8,52,193.. The average 
duration of strikes was 23.2 days. The number of days work lost by 
586 strikes and lockouts in 1893 was 31,205,062. The total number of 
strikes ,*md lockouts for that year was 782. 

France. There were in the years 1893-1894, 1,025 strikes involving 6,017 
establishments and 224.699 strikers, causing a loss of 5,1.56,480 days' 
labor. 
.Similai' I'acts for Ital.v and .Viistria can be found in tlie liutletin. 

4. histability of Ecoiioviic Life. Throughout the 
present century industrial life has been characterized 
by alternate periods of prosperity and depression, trace- 
able, in the main, not to the conditions of external nature 
or the course of political events, but apparently grow- 
in"- out of the nature of the industrial organization. 
I^'or considerable periods men willing to work have not 
been able to find employment although an abundance 
of the necessary materials and instruments were at hand ; 
producers have not been able to find a market for their 
products, although there were thousands of people who 
desired those very commodities and were willing to 
work to produce an equivalent for them ; people whose 
property far exceeded their debts have been forced into 
bankruptcy because they could not immediately turn 
their property into money. 

Certain of the causes, connected with the modern 
organization of industry, tending to this result are 
evident. 

I. The difficulty of adjusting supply to demand, the 
result {a.) of the wide separation of the producer from 
the consumer, (^.) the great and indefinite number of 



Periods of I'' rosfcrity aiui Dofrissioii. 121 

producers and CDnsumcrs coming; together in a single 
market, (c.) the rapid changes in [^rockictive processes 
and, conseqiientl)^ in i)roductive power, {d.) the rela- 
tively large amount of durable and specialized productive 
wealth, rendering difficult a rapid redistribution of pro- 
ductive power. 

2. The greatly increased complexit)" of economic or- 
ganization and its greatly increased delicac)', due to the 
extended use of money and credit. Anything which 
shakes confidence, on which credit rests, acts as a 
check on ever}- branch of production. This explains 
why so many periods of depression have had their origin 
in disturbances of the monetary and banking systems. 
In the same way a variation in prices affecting the debt 
paying power of producers may have most disturbing- 
effects where there is a large body of debts running for 
a number of years. 

(ioiug back in the hUtury of the United States to tlie year 1.S57, there 
was iu that year an industrial disturbance due to speculation antl uu 
sound banking, , from which business did not recover for a jieriod ol' 
four or five years. The next severe di.sturbance, due to much 
tlie same causes, came in \^:u, but lasted only a short time. The years 
immediately following the civil war were a period of inflated prices, 
rapid railway extension, and speculation. This period was followed 
during the years l!S7;i-187'J by a time of great business depression 
marked I'y failures, enforced iitlenessof labor and capital, and greatly 
diminished pioduction. From ISTSi-lSS-i there was a partial revival 
due, for the most part, to large crops at the same time that there was 
a shortage in Eui-ope, followed by another period of ilepression lasting 
until 1886 with a severe panic in 1884. The years following 1886 were, 
on the whole, prosperous until 1892, but in 18!i3 came another i)anic 
followed by a period of depression, from whicli business has not yet 
recovered, on the basis of careful estima'es it is safe to say in 
thirty-eight of the principal cities of the country, during the winter of 
1893-18i)-l there were 500,000 laborers out of employment. (Quart. Jour. 
o/' jEcs. Vol. viii, p. 2,i7). 

The study of the history of other countries will show a course of 
events similar to that in the United States. ( First Annual Report uj 
the fU. S.) Commimtioner of Labor). 

5. Increase of Goveriiiiioital Reg-nlatiou of I iidiistrv- 
Though one of the most marked features in the eco- 
nomic history of the early part of this century was the 
abandonment, on the part of government, of the attempt 
to regulate the course of economic life, the growth, in 



122 Increase of State Reo-/i/ati<>n. 

connection with the new industrial system, of evils evi- 
dent!} dangerous to social and economic well-being" has 
necessitated a revival of governmental regulation, a 
tendency which began even before the old forms ol 
regulation disappeared, but which has been particularl\' 
marked during the last twenty years. The great bulk 
, of this legislation ma\- be classified under the following- 
heads: I. Regulation of the conditions of labor, par- 
ticularly for women and children, with reference to 
hours, Sunday labor, safety, sanitary conditions, methods 
of payment, etc. This class of legislation applied first 
to mines and factories, is gradually being extended to 
all workshops where women and children are employed, 
and practically acts as a regulation of men's labor in all 
industries where they are emploj'ed with women and 
children. Like regulation has also been applied to cer- 
tain industries (especially steam and street railways) in 
which men only are employed. Such legislation has 
largely grown out of sympathy with the laborers on ac- 
count of their relative weakness under modern indus- 
trial conditions, but it is also justified on the ground of 
preservation of the energ)-, intelligence and moralit\' ot 
the labor force of the communit}-. 2. Regulation oi 
the business (especially as regards prices) of certain 
monopolies which render servaces of fundamental im- 
portance to the community, railways, telegraph and tele- 
phone companies, water and lighting companies, etc. 
In man}' instances regulation has been superseded b}' 
government ownership and management. 3. Regula- 
tion of the organization and use of credit, a result of the 
great economic disturbance which experience has shown 
may follow unsound methods in these particulars. 4. 
Regulation of the use of certain resources of prime pub- 
lic importance — forests. 5. The latest development 
of the tendencv to governmental regulation is in the 
direction of compulsory insurance of the laboring- 
classes, the means being supplied, largely, by compul- 
sor}- savings on the part of these classes, with a view to 
providing support during periods of inability to work ; 



I 



Labor Legislation : England. 1 23 

a result of the instability of economic relations and the 
uncertainty of emplo\nient under modern industrial 
conditions. 

In addition to tliese general classes of legislation there 
have been striking cases of governmental intei'terence 
in special cases, noticeabl) the compulsor\ readjust- 
ment of land rents in Ireland, and compulsor) acquisition 
of land, m England, iox assignment in small allotments. 
There are also man)- other cases of increased govern- 
mental interfei^ence, or interference in new diiections, 
in which the economic motixe rs not predominant, 
but which have most important economic results ; 
i\ g. free and compulsor\' public education, regulation 
of sanitar\' condition of dwelling houses. 

Leghldtion for the protection of women ttiiil ehildrtii. Kngland. 'I'he 
lirst step iu this chis.s of lesiislation was taken in JS02, and was di- 
rected against the terrilile evils arising from the employment, in cotton 
and woollen fa<'tories, of pauper children apprenticed by the parish 
authorities. Il applieil only to apprentices and, for these, reduced the 
hours of laboi' to twelve per day, forbade night work, with a few ex- 
ceptions, provided for the clothing and instruction of the apprentices 
by their masters, and required the observance of certain sjinitary con- 
ditions. By an act of 181 U protection was extended to all children in 
cotton mills: employment of children, under nine years of age, was 
forbidden ; hours of labor for young persons (9 — 16 yeais of age) were 
limited to twelve yier day, excluding meal times (I'i honr>). and night 
work was prohibited. An act of 1825 shortened the hours of labor on 
Saturday to nine, and an act of 1831 loibade night work to all under 
twenty-one, and raised to eighteen the age limit of those who had the 
benefit of the twelve-honr day with nine hours on Saturdny. All of 
the acts mentioned, ex(!ept that of ISO'2 which had become practicall.v 
inoperative, applied only to the cotton iudustrj'. The first legislation 
affecting the whole textile industry ^some exceptions in the case of 
silk) was the act oi 183S. This act distinguished between " cliildren " 
(9 — 13 years of age) and 'young i>ersons " (13 — 18 years of age), the 
hours of labor for the former being limited to nine per day and forty 
eight per week, for the latter to twelve per day and sixty-nine per 
week. Night work was prohibited for both classes, and children were 
required to attend school two hours each day. By act of 1 844 the 
working time of children was reduced to Kj-b hours per day, and they 
were not to work after 1 f. M. on any day iu which they had been em 
ployed in the morning; they might, however, be employed ten hours 
per day, if they were employed on alternate days only, the interven 
ing days to be spent in school. The minimum age for the employment 
of children was reduced to eight, but the regulations concerning 
young persons were made applicable to all women, and provision was 
made for proper sanitary arrangements and for safety. By the act of 
1847 the working time for young persons and women was limited to 
ten hours per day and fifty-eight hours per week. In 18.")0 the daily 
labor time was increased to 10>3 hours, but with no work alter 2 p. m 



124 Labor Legislation : England. 



on Siilurdays. Thougli lenjitheniiig llie working time slightly, the net 
was a real advance. The working day was lixed at G a. m. to 6p. m., ex 
cept on Saturday, when it was to close at -1 v. M., i'j' hours to be al- 
lowed for meals (Saturday \K hours). The maxininni working time 
was thus sixty hours per week. The main outlines of the systeui of 
regulation had now been established, and its subsequent history is one 
of extension and improvement. An act of 184.5 had prohibited night 
work by women and childien in print work-^, and j)rint works seem to 
have been included in the provisions oi the act of 1847 anil subsequeiit 
factorj- acts. In 18(i0 the factory laws, with souie modifications, were 
extended to bleaching and dyeing works; in 18ti;5 to factories in which 
bleached and dyed goods were calendered, dressed and finished; in 
1864 to workshops where the work was done by manual labor other 
than that of males ovor 14 yeais of age. In 1861 lace factories using 
power machinerx had been brought under the act, and in 18(i:j work in 
bake-honses, between 9 M. and 5 a. m., was jjrohibited for persons un- 
der 18 years of age. Great advance was made by an act of 1864 whi'-h 
extended regulation to manufactures of earthernware (excep; bri(;k 
and common tiles), lucifer matches, percussion caps and cartridges, 
and to the employments of paper staining and fustian cutting. By the 
Factory Acts Extension Act and The Workshop Ttegulation, Act, both 
passed in 1867, regulation was practically extended to all manufactur- 
ing inchistry. employing women, young persons, or childien, ex 
cept such as was carried on by independent worker^ or in the homes 
of the woi'kers. The first mentioned act. after specifically enumerat- 
ing several industries, brings under its provisions "any premises, 
whether adjoining or separate, in the same occupation situate in the 
same city, tow^i, parish, or place, and constituting one trade establish- 
ment, in * * * * which fifty or moi'C persons are employed in any 
manufacturing process." The industries specifically mentioned in- 
clude;! smelting works, iron and steel works, foundries, manufactures 
of mjichinery and metal goods, rubber and rubber goods. pa|)ci'. glass, 
and tobacco, and printing and bookbinding establishments, though in 
the case of many of these more, less important, modifications were 
made in the application of the law. By the second act mentione<l 
above, similar, but less strict, provisions were extended to establish- 
ments too small to come under the factory act. Xo adequate i)rovifion 
for enforcement was made. Between 18()7 and 1868 there were some 
minor changes, and in the latter year the whole body of factory and 
workshop legislation was consolidated in a single act. The' principal 
changes reached in this act on points above considered are as follows : 
The minimum age for the employment of children was fixed at 10 
years, and they were classed as children up to 14 years; the age limits 
for young persons were 14 and 18 years, though children of IS years 
might be treated as "young persons'" it they had reached a certain 
educational standard. The working day for women and children in 
textile factories was twelve hours as before, but two hours were now 
to be taken out for meals, the working day on Saturday not to exceeil 
seven hours with half out for meals, thus making the maximum actual 
working time per week .i6>^ hours, and no woman, young person, or 
child was to be employed continuously foi- more than 4J2 hours without 
an interval of at least one-half hour tor a meal; children could not be 
employed in both morning and afternoon of the same day. unless they 
were employed on alternate days only. In nou-texlile factories the 
working day was t\yelve hours with Ui hours out for meals (Satur 
<lays eight hours with one-half hour for mealsj, making the actual 
w-eekly working time sixty hours. In workshops the actual working 
time was the same as in uon-textile factories, but the limits of the 



I 



Labor Lvi^ixhUion : I'liitcd S/a/rs. 125 



working day were (5 a. m. .-111(1 '■> r. M., instead oU> a. m. (or 7 A. m.; jiiid 
() p. M. (or 7 P. M.). as i" the latter. 

Full provision was made I'or sanitation, C.-;alety, and education of cliil 
dren; Sumlay labor was iiroliibited. employers were compelled to 
grant full holidays on Christmas and Good Fridav and eight half holi- 
days each year in addition. Most of these provisions had reference 
simply to women, young persons and children, but some (e ff., in re- 
gard to .sanitation and safety; ai)plied without reference to any 
special class of workers, and all provisions practically affected men 
ill industries in which any con.siderable portion of the laborers lie- 
longed to the protected classes. 

Special provisions in the direction l)olh of greater leniency and strii-t- 
ness were made in connection with special industries, the eniploy- 
meiitof women, young persons and children being absolutely forbid- 
den in some cases. (The full text of this act, which is perhai>s the 
most in.portant and coniDrehensive iiiece of labor legislation in the 
world, can be found inNottcutt's Faciorie.i and Worlcshops Act A sum- 
mary of the provisions relating to textile factories can be found in 
AVright's Report oh the. Factor// Sij.itcm in the I'o/. on Movufactiiren, 
1 0th Census of U. S.). 

Tlie last factory act was that of isyi, which raised to 11 the minimum 
age for employment of children, lorbade the employment of women 
within four weeks after confinement, and liroiiglit under the sanitary 
provisions and subjected to inspection by government oflicials work- 
shops where men only are employed. Mines. Undei-ground work in coal 
mines by women and by i oys under 10 was prohibited in l.^"4-2; in 18(50 
regulation was extended to iron mines, and in 187'2 to all metalliferous 
mines. According to the law as it now stands the minimum age for 
boys under ground has been raised to l.', and boys between 12 and l(i 
are not to work more than 10 hour.s a day or .il hours a week, with 
intervals of at least 12 hours rest. Children under 12 are prohibited 
from working above ground, and those under l.S cannot work more 
than three days a week. The hours for young persons and women 
(above ground) in coal mines are the same as for boys (12-16) under 
ground. There are provisions in regard to night work, Saturday half 
holiday, .Sunday work, health and safety, corresponding to the pro- 
visions of the factory acts; above ground work in mines other than 
coal mines comes under the factory acts. Mercantile establishmenfx 
wei-e subjected to regulation in 18S6, the hours of labor for iiersoiis 
under 18 being limited io 74 a week. 

United States. Regulation of the kind above described is a matter 
of state legislation, and therefore presents little uniformity and can 
with difliculty be summarized. It began about the middle of this 
century, and has developed most extensively in the manufacturing 
states of the north and east, appearing only exceptionally in the south 
ern and trans-Mississippi states. In the following table no claim is 
made of perfect accuracy or completeness, but it is believed that it 
presents a substantially correct view of the state of legislative re 
strictions on the labor of women and children in the United States at 
the end of 1895. It is based on the SecomI Special Report of the (U. S.) 
Commissioner of Labor (which contains a compiliation of the labor laws 
• of the states up to about 1890), supplemented bp the annual reviews of 
labor legislation published in the Quart. .Tourn. of Ecs. 

The letters designate the kind of industry to which the regulation 
applies: m-mines; m(c)-coal mines; f-fartories: f(c&w)-cotton 



126 



Labor LcgisIatio)i ; United States. 



Mild woollen iMctdrif-;: \v workshops; s-stores (iiu'rciiiitilr f-i.'ilili-h 
iiients. ) 





Mini- 




Hooks ok I^aboi;. 






Mini- 


" 


HOUUS OK I,AB<»1!. 






mum 
age 












IIIUIII 

age 
































STATK. 


for 
Em- 
ploy- 


Children. 


Upper 

age 
limitfor 


Women. 


Statk. 


for 
Em- 
ploy- 


Child 


ren. 


Upper 

age 
limitfor 


Won 


fii. 




















ment. 


Uay. 


Week. 


Child'n. 


Day. 


Week. 




ment. 


Day. 


W'k. 


child'n. 


Day. 


VVlv. 


Al 


1.-. 
Ill 


s 
fw 




14 






Minn... 

1 




■ 

fws 




is 


l(ii'l:r' 
f\\ 




Cal.. .. 


10 


10 


(iO 


IS 






N. H... 


l:i 


10 


(ii) 


1> 10 


Cll 




Iws 


fws . 


fws 








1 


fw 


iw 


fw 




fw 


Iw 


Col .... 


14 
m(l)f 












N. .7.... 


12(14) 
mfw 


]()(l.i) 

fw 


fw 


14 


li)( 1.-,) 
iw 


fw'' 


( onii. . 


14 


10 


(id 


10 


10 


60 


N. v.... 


14 


10 


60 


1S(16) 


10 


6(1 




fw.-t 


Iw.^ 


Cws 




fws 


fw^s 




fw 


fw 


fw 




fi\- 


fw 


(iii 




11(2, 


06 




11 


66 


IN. 1).. . 




10 




14 










f(c&w) 


f^c&w) 




f(c&w) 


f(c&W) 


1 




fw 










klalio. 


14 

in (1) 












iOhio... 


14 
in f w 


10 

fw 




IS 






Ill 


13 

14 
Iw 












Ha 


12 

iiiU\> 
(IT) 


1(1 
r (IS) 


t;o 
fws 


minori- 
ty. 


(19) 




Ind.... 


14 


10 




18 






R. I.... 


12 


10 


6(1 


16 


10 


oil 




1(3) 


f(c&w) 






(4) 






fws 


fw 


fw 




fw 


fw 




m(c) 


8 
fw 




14 






s. c.-.. 


(20) 


(21) 

u 




11 




Iowa... 


1-2 

111 












S. D.... 




fl.C&W) 

]() 




14 


f(c.Vw) 




Kan 


1-' 
ni 












:Vt 


10 


fw 
' 10 




1.-) 






l,a 


12 (.->) 
fw 


10 
Ivv 


00 
f« 


18 


10 
fw 


(iO 
fw 


^^•l 


fw 


f\\ 

1(1 




14 


10 




Me 


12 
fw 


10 

fw 


00 


16 (6) 


10 (7) 
fw 


(;o 
1w 


iWash. . 


14 


f 






f 




M(l.. .. 


i 


10 

fw 




16 
21 

f(c&w). 


10 
f(c*w) 




W. Va . 


mfw 
12 
























1 


fni 












.Mass.. . 


13 r8)l 10 


.■)S 


18 (9) 


10 


.iS 


Wis.... 


14 


s 




14 








fWS; 


fws 


fw 




f^v 


f« 




m f w 


fw 










Mich... 


12 

fw.'? 


fwn 


.■)4 
Iws 


14(10) 


10 
fw 


60 
fw 


A\ y .... 


14 

(22) 
















(11) 






(12) 




I 















(1) Underground. (2) The act prohibits the making of, Tind declares 
non-enforceable, contracts for longer hours but apparently does not 
absolutely forbid working longer hours. |3) Manufactures of iron, 
steel, nails, metals, machinery and. tobacco. (4) Employment of 



I 



I 



I 



I 



I 



Labor Legislation ; United States. 127 



womep in coal iniiies liiil)iil(lcii. (5) Tliis applies to boys; the age for 
jrirls is 14. ((!) This is the a^e lor boys; the age for girls is IS. No 
corporation can employ anyone under 16 for more than 10 hours. 
(7) Women of 18 and over may contract for not exceeding 60 addi- 
tional hours a year. (8) Night work forbidden for children under 14, 
and in manufacturing establishments for women and minors. (9) Mi- 
nors in mercantile establishments not to work over 60 hours per week. 
flO) This is the limit for boys; for girls it is 16 for the daily hours and 
15 for the weekly hours. (11) This provision applies apparently to 
every form of business except agriculture, domestic service, and 
clerkships in stores. It is not clear whether it was appealed by the 
act fixing the weekly hours at 54, which came later. (12) This act came 
earlier than those just mentioned and forbade the employment of 
children iiiuler IS and of women in any factory, workshop, or ware- 
house, for more than an average of 10 hours a day or 60 hours a week. 
(13) Applies to women in all employments except domestic service and 
farm labor. (14) This is for boys; for girls the limit is 14. (15) For 
the first five days of the week the hours are 7 A. M.— 1-2 M. and 1 P. M. 
—6 P. M. ; Saturdays, 7 A . M. to 12 M. (16) This is the age for males ; 
the age for females is 21. (17) No boys under 14 in underground 
antharacite mining; girls cannot be employed in mining; the mini- 
mum age in cotton, woolen, silk, paper, bagging, and flax factories is 
13. (18) Applies to factories mentioned under 17. (lit) Women cannot 
be employed in coal mining. (20) Includes telegraph and telephone 
companies. (21) Manufacturing estal)lishments. (22) Applies also to 
all women. 

In addition to the provisions above noted, several states have passefl 
laws declaring a certain number of hours to be a day's work for 
women and children, and forbidding employers to compel (but not to 
permit) persons of the classes named to labor for a longer time than 
that specified. Some of the states included in the table al)ove given 
have additional legislation of this kind with lefereuce to older 
children; such laws, however, can be easily a voided by the consent 
(voluntary or necessitated) of the workers. More imporianl is the 
usual requirement of certain educational qualifications as a condition 
of the eniploj'ment of children tor some years after the minimum age 
has been reached. Laws reqi.ii ing that sea<s be provided ./br wo»ie» 
icorkers are of very frequent occurrence. In connection with the 
regulation of women's labor it is interesting to notice that a law 
passed in Illinois, limiting the hours of labor for women to 8 a day, has 
been declared unconstitutional by the courts, on the ground that it 
was a violation of the right of free contract, and not a iustitiable ex- 
ercise of the police power. 

As in England the regulation of hours is usually accompanieil liy 
provisions for ensuring the health and safety of the employees. 

Let/islation invoh'hif/ the regulation of men's hibor. Indirectly, even 
in industries in which women and children are not employed, the 
legislation above described must have had an important influence on 
the conditions of labor for men. Lately, however, there has been a 
marked tendency to extend legislative provisions for securing health 
and safety, without reference to the character of the employees- In 
England this was done in 1891 by an amendment to the factory act. 
In the United States the recent sweat shop acts (in Mass., N. Y., N. J., 
Pa., Md., 111., and possibly other states), regidating the conditions of 



128 Labcr Lr^-is/d/ioii ; J/r 



industry ciuried on in ihvi'llin.i; liouses, ;inil llic N. V. act of \sUit. 
I'liforciiis sanitary comlilionsi in l)akc'rii>, are legislatiDn ol tlu- same 
kind. Acts requirintj proper provision lor health ami safely in mines 
are almost universal wherever mininir is an important industry. In 
the United States several of ilie individual states (Conn.. 111., la.. 
Mass., Mich., N. H., \. V., and perhaps otiiers) require the use ul 
safety appliances in tlie manaaemenl of railway trains, and in 18!Ki a 
law was enacted by the national novt'iiiment requiring that after 
Jan. 1, 1S98, all trains engaged in interstate commerce be equipped 
with train brakes worked from the engine, and with automatic cou)) 
lers. Direct reiitilatio)t of the hums u/ Uibor of men has, been ex 
ceptional and coHsidered as lesting on a very different basis from like 
regulation for women and children, and as involving a much more 
serious interference with the freedcnn of conti-act. Such regulation, 
however, has sometimes taken place. The excessive hours of labor 
on railways in England led, in IS'.Ki. to the passage of the Iluilirai/ 
Re(julation Act, which gives the I'.oard ot Trade and the Railway and 
Canal Conunission power to enforce reasonable hours of labor on rail- 
ways. In the United States the national government and many of the 
states have passed laws fixing the hours of labor for employees in the 
|iublic, service and even for all engaged on public, works. Many 
of the states, too, have lixed the number of hours (frequently 8) whicli 
should constitute a day's labor, in the ab,sen(;e of an agreement to the 
contrary, but an act of this kind m Nebiaeka, which provided that 
extra hours should be paid for at double the rate of the preceding 
hour, has been declared uniionstitutional liy the couits. The nu)st 
importaut legislation regulating the hours of men has been in connec 
tion with railway labor, and may be defended on grounds of public 
safety. Tlie following states (and possibly others) limit the hours of 
labor on street riiifirut/s as follows: Cal. Oi>: La. (12): Md. (li): :SIass. 
I 10); X.J. (1-2); Fa.(l-i): Wash. (10): N. V.(IO). A leAv slates have 
liassed like legislation wiih le Terence to steani rdilicays: Col. (18); 
Minn, (l.s, for engineers and lirenien); (). (not more th:in I.t hours 
continuous la l)or, to be followed by eight lioursrest: applies to train- 
men and telegiaph operators); Ga. (trainmen not to be reciuired to 
make runs aggregating o«er thirteen hours in any twenty-foui' hours). 
In 1S95 X. Y. limited th<i hours of labor in bakeries to si.xty a week. 
The laws of Ga. and S. C regulating hours in cotton and woollen fac- 
tories, nuike no distinction between different classes of employers. 

.\nother sort of regulation is that relating to the payment of wages. 
Most important are the ai-ts forliidding the payment of wages in any- 
thing but legal money, the compelling laborers to make their purchases 
at specified stores, aud deductions from wages for debts due by labor- 
ers ( Truck Acts; . Laws of this kind, more or less special in charactei-, 
have been passed in England ever since the fifteenth century, but the 
first somewhat general act was passed in 1831. This was superseded 
by a more iieneral and better enforced act in 1887. Similar laws have 
been passed by a dozen or more of the states of this country (in sev 
eral of the states, however, Pa.. W. Va.. and Mo. among them, these 
laws have been declared unconstitutional). The ndning act of 1842 in 
Kngland forbade the payment of wages in a public house. Acts reg 
ulatlng the frequency of payment are quite common, several of the 
states enforcing weekly payments. In several of the mining states, 
where wages are paid on the basis of the (juantity mined, there art; 



Regulation of Monopolies. 129 



laws (k'tciininiiiL; Iho \\;iy in wliii-li llu' i|uaiilU.\ shall be <lfti'niiine(l; 
screen hiir. 

(For a brief general \ iow of laboi' legislation, its iiussibilities and its 
limitatious, see Labor in Itn Relaliuas to Law, ))y F. J. Stinisoii ; lor a 
summary of like legislation in other countries, see the article on Ar- 
lieiteisclnitzffesetiffehmu/ in the Hniidw'b V/. Staatsiri.sx, nuiA AVright's 
article oil The Factory System in Vol. II. of the Tenth Census). 

Jietjulation of MoHopolies. L'ailway.i. Evghtnd. It was customary 
in acts granting railway cluulers, to reserve the right of revising rates, 
and this general right, together with the right of the slate to purchase 
the railways, was asserted in an act of 1844. The first positive action 
in the way of railway control, was taken by an act of 1854, requiiing 
every railway to afFord proper facilities lor forwarding traffic and for- 
bidding disi'riminalion. The enforcement of the act was left to the 
ordinary courts, but this pi-oving unsatisfactory, a special commission 
was api)ointed in ]87.'!, and renewed from time to time, until the ap- 
pointment of a (permanent commission under an act of 1888. This act 
also gave to tlie Board of Trade supervision and final decision (sub- 
ject to confirmation by parliament) as to railway rates. United States . 
Many of the individual states, particularly in (he south and west, reg- 
ulated the rates of railway charges, either lixing maxima, requiring 
rates more or less proportionate to distance, or requiring " fair " rates, 
and ajjpointing comndssions to enforce the requirement. Tliere were 
many acts of this kind passed in the western states during the period 
1870-77 in connection with tlie Grange Movement (see Hadley, liail- 
road Tr(tns[)ortatioH pp. 129-140). In 1887 Ihe national governn)cnl. 
which, under the constitution, has the right to regulate interstate 
commerce, passed ;in Interstate CowHierce ^c^, and established an In- 
terstate Commerce Commission to enforce it. Tlie most important jiro- 
visions of the act ai-e, in substance, as follows : 1. It provides that all 
charges shall be reasonable and just. What.is reasonable and just is 
left to the deternunation of the comndttee. 2. It forbids unjust dis 
crimination between )iersons and places. What constitutes unjust dis 
crimination is delined in a general way, but here again much is left to 
the discretion of the comndttee. The most specific prohibition is that 
which forbids a roail to make a greater charge for a shorter than for a 
longer distance, for the transportation of passengers, or like goods, 
under similar circumstances, over the same line in the same direction 
when the shorter is included in the longer distance. 3. It rcqinres 
companies to afford proper facilities I'or interchange of passengers 
and freight, and not to discriminate against each other. 4. It forbids 
"pooling." 5. It requires the publication of rates. 
I »n the Continent of Europe, in Lndia and Australia, government con- 
trol, or government ownership and management of lailwajs, prevail 
almost without exception. 

Afunirijtiil Monopolies, (transpotation companies, companies supplx 
iiig water and light) are almost everywhere subje('te<t to some sort of 
regulation, as to quantity, i|uality, and price of service, and, trans 
porlation companies excepted, are frequently owned and managed by 
the municipal government, especially in Europe. 

The growth of combinations of capitalists has led to more or less 
legislation seeking to maintain competition by prohibiting such com- 
binations. The United States and several of the individual states 
have passed antitrust laws. The laws have, however, proved very in- 



130 Banking. Coinpulsory Insurance. 



etticient, the re.ison beiug the great variet.y of lornis under which com- 
binations can be effected, tlie difficulty of defining the distinctions be- 
tween legal and illegal combinations, and the difficulty of obtaining 
positive evidence as to illegal action. 

Banking, particularly as regards the issue of notes intended to cir- 
culate as money, is everywhere subject to governmental regulation. 
In Rnglawl an act of 1844 restricted the right of issuing notes to banl<s 
already exercising the privilege, no bank otlier tlian the Bank ol 
England, beiug allowed to increase its issues. The Bank of England 
was allowed to issue notes to tlie amount of £14,000,000 on the security 
of government obligations, but the issue of additional notes was per 
nutted only on condition that there be retained in the bank coiu or bul 
lion e(iual to the amount of such additional notes; in case other banks 
having tlie right of issue should give up such right or go out ot busi- 
ness, the law permitted the Bank of England to increase its issues un- 
covered by coin or bullion by two-thirds of the amount of issues so 
given np. In the United Slates tlie right of issuing notes is practicall> 
confined to banUs organized under the national law of 18f;3, and its 
amendments. Tliis act re(iuires the deposit, witii the national gov 
ernment, of United States bonds as security for notes issue^l, the main- 
tenance of a reserve of 25^ or W,i of deposits, according to the charac 
ter of the city in which )he bank is situated, and the accumulation of 
a sxirplus equal to 20;? of the capital. Further provisions determine 
the character of the investments allowed, and subject the banlcs to in 
spection by government oflicials. Almost every state, also has laws 
regulating methods of banking and insurunce. The use ot forests 
which are the property of private individuals, is, throughout the con- 
tinent of Europe, sul)jcct to more or less strict government regulation 
(see Pinchot G. Government Forestry Abroad in Pubs. 0/ Amer. F.r. 
Assoc. VI.) 

The compulsory insurance legislation of tlie German A'mp/recomprist > 
three parts. 1. Insurance ag,ainst sickness, {^n^tnaX, 19:^). The laws 
specifiy in great detail the classes for which insurance is compulsory. 
They incluile almost all persons, in continuous employment for more 
than a week, who work for wages or for a salary less than 2000 marks 
a year, witli the exception of agricultural laborers, and for them insur- 
ance may be made compulsory within a given territory ))y vote of the 
individual states or communes. Such votes have been passed in many 
cases. The law recognizes seven kinds of insurance associations, 
(four of them in existence when the law was passed), in which insur- 
ance inay be effected. In all except the free associations the employ- 
ers pay oue third and the insured two thirds of the contributions: 
towards insurance in tlie free associations the employer pays nothing. 
The amount of relief received varies witli cliaracter of tlie association, 
but in no case exceeds the expense of medical treatment and 75^ of 
wages. The average membership of these associations in 1893 was 
7,106,804, the number of cases of sickness 2,794,027, days of sick 46,r,J9,43K 
contributions by employers and employees, and entrance fees 106,154,fiti3 
marks, total income 132,137,396 marks, payments for medical treatment 
and sick pay 101,971,698 marks. 

Insurance against accidents (first act 1884). Like sick insurance it is 
compulsory, for the great bulk of the workers for wages, and for sala- 
ries less than 2,000 marks a year. In 188G it was made compulsory for 
those engaged in agriculture, and in 1887 tor those engaged in mari- 



Character of Goi'cnnuciital Regulations. 13 1 



liuie einploynieiiti". Tliis l:i\\ is su|>ijU'ineiitar.\ to the sick insuraiKf 
law, and becomes operative only after the thirteenth week of bicknes.^ 
due to accident. The burden of insurance rests entirelj- upon the em- 
ployers. In case of total disability the payments amount to two-thirds 
of the wages; in case of partial disability the payment is proportional ; 
in (;ase of death there is a payment for burial expenses, and a pension 
to the survivors, not to exceed sixty (ter cent, of the wages of the de. 
ceased. Accurate statistics as to the number injured are not available, 
but it is safe to say that in 1893 (including small farmers) it was over 
l'2,()00,000. The accidents for which payment was made numbered 
•J-2-2,475i of which loi),T4(J occured in previous years, the payments on 
account of the same amounting to 38,163,800 marks. 
Old age. and disability insurnnre (first act 1889). Compulsory, practi. 
cally. for all workers (over 16 years of age) for wages, and for salaries 
less than -2,000 marks a year, and may be extended by the federal 
council to small independent producers. Disability means inability to 
earn one-third of former earnings ; old age begins at TO. The funds are 
raised by contributions from the imperial treasury (.i0 marks yearly 
for each .pensioner), and by payments from the employer and em- 
ployees, these two classes contributing equal amounts, varying for the 
first ten years from 14 pfennigs to 30 pfennigs a week, according to the 
wages of the person insured. The number of persons insured under 
the act in 1893 could not have been less than 12,000,000; the number of 
pensions payable on December 31, 1893, was '210,294; the payments 
made during 1893 amounted to 28,046,200 maiUni. including 11,261,700 
marks contributed by the Kmpire. 

A description of the German insurance laws will be found in the 
lumrtli Specifil Report of the Commissioner o/ Labor (U. S.) It was 
prepared by .). G. Brooks. There is a prospect that the German laws 
will be more or less widely imitated on the continent of Europe, and 
the policy <>f old age iiensions has many strong and able advocates in 
Kn gland. 

For an enumeiation and brief description a great variety of acts 
recently passed by the English parliament, and interfering with the 
system of individual rreedoni, sef Cunningham W., Politics and Eco^ 
iiomics. 

Instances of regulations affecting international relations nrv.lhii pro- 
tective import duties imposed by almost all nations, with a marked in- 
crease to extension and increase during the last twenty years, and the 
restrictions imposed on immigration, (('hivext Kxclvsion .-J ^<s in the 
U.S.). 

Though, during the last fifty years theie has been a 
ort-at increase in governmental regulation of industry, 
it is evident from the account of this legislation given 
above, that it has been along different lines from those 
which were characteristic of the gild and mercantile 
.systems. Modern legislation has as yet, with very few 
exceptions, shown no tendency to regulate prices, 
wages or methods of work, but has confined itself to 
regulating the conditions under which industry must 



132 Stditi- Manai^ciiuiit of I mi list ry. 

l-)c carried on. It is true, howex^er, that j)ropositions for 
the regulation of [Alices, and of wages, through com- 
pulsory arbitration oi' the enfoicement of a "living 
wage" are attracting more serious attention than the\' 
have for many years before. 6. (j roiotli of govern- 
ment ownej-ship and management of indnstry. This 
tendency has been almost as marked as the increase in 
govei-nmental regulation of industry in general, but has 
been due not so much to encroachment by go\-erment 
on the field formerly occupied by private industry, as 
to (i.) the growth of certain new forms of industry 
which from their fundamental importance, and the fact 
that efficient management is largely dependent on 
organization, are peculiarly adapted to governmental 
management ; industries connected with transportation, 
communication, lighting, water suppl}', etc.; (2) finan- 
cial considerations, go\ernment ownership and manage- 
ment being regarded as a more productixe and econ- 
omical method, than taxation, of obtaining rexenue. 

A more detaileil aix'Oiuit ol the part pliiytMl by modern goveinnicnls 
as manager.^ of produitivi' iiidustr.\ will be jri\ on in cimiicction with 
tlie lecture on the oi'gani/.ation i>r )ii-(idiictioii. 



LECTURE XIX. 



GENERALIZATIONS FROM ECONOniC HISTORY. 

Ti:rkit()Rial I^xtkxt oi' J'^coxo.mic J'k()(;re.ss. 

Baktiiolomkw J. (i. Atlas of Commercial (icoo-rapliy. 

Classifications oi" tiiI'. Sta(.i:s oi" I^'coxo.mk: Dkxki.op- 
Mi:x r. 

ScHONlsEKG (i. Uaudiich dry PoUtisclicu Ofkonomic 
\o\. I, I. This same classification will be fountl in sub- 
stance in I'JA' R. T. An iiiti-odiiction to Political 
Economy Pt. I L'h. \i. Schmolli-.k (t. The Mercan- 
tile System (translation from the German). Fa\r1': Ch. 
Ldivolution Economiqite dans F Histoire, in Revne 
d"" Economic Politiqne, \'ol. VHI p. i. (an abstract of 
Ix. Buchkr's, Die Entsteluing der Folksieirtsc/iaft). 
Vox the stages in the evolution of manufacturing in- 
dustry see Bl'cher K. Les Formes d' Industrie dans 
lenr Dcvelloppement Historiqne in the Revne 
d' Economic Politiqne \'ol. W. p. 625. 



In looking back over the course of economic dexelop- 
ment we are enabled to make certain generalizations in 
regard to its extent and character. 

I. Economic Progress has been the Exception. The 
land area of the earth is about 52,000,000 square miles. 
It is probably a conservative estimate that under exist- 
ing climatic conditions not over 40,000,000 square miles 
are available foi" industrial purposes, of which not over 
one half is occupied by peoples who ha\^e passed beyond 
the statre of barbarism. 



134 lixtcnt and Coiiisc of licoiiomic Progress. 

TIk' eritimatu iiiclutlf!* the tervitoiy occuiiicil Ijy poDiilcs who have 
reached even tlie hiwer stages of civilizatinii. It docs not imply that 
all the land in this territory is I'ully used; much of it is idle or only 
liurtially used. The ijreater part of A I'rica and considerable portions 
of Xorth and South America and Asia are still occuiiied by barbaric or 
savasie peoples. 

The population of the world is probably about. 1,500,- 
000,000, of which perhap.s one fifth are in a .state of bar- 
barism or savagery, not much oxer one half have made 
any appreciable progress m historic times, and less than 
one third, occupying not over one fifth of the available 
area, have reached the highest stages of industrial de- 
velopment (nations of central and western Europe and 
the United States). The population of the world may 
be roughly classified into races as follows ; \Vhitc\ 610,- 
500,000; {Aryan, 545,500,000: Semitic, 65,000,000); 
Yt'/loio, 630,000,000; Black, 185,150,000; Red, 15,000- 
000. A portion of the Aryans alone have reached the 
highest stages of industrial development. Although 
there are indications of a great progressive movement in 
the near future, it is exident that in the past }M-ogress 
has been the exception rather tlian the rule. 

The next great progressive movement is aiipareully to lake i]lace iu con 
nection with the oiiening up of Asia to modern industi'ial methods 
through the inlliience principally of Russia and .Jaiiaii , trans Siberian 
railway In the process of construction by the Itu^sian Government). 

2. ]\conoviic Progress has been irregular and discon- 
tinuous. Long jjeriods of comparati\-ely stable condi- 
tions ha\'e alternated with periods of rapid })rogress. 
Such periods of progress accompanied the growth of 
city life at Athens and in Asia Minor, the establish- 
ment of the Roman dominion, the rise of city life in 
mediaeval luirope, the rise of national life in the six- 
teenth and seventeenth centuries, and, most strikingly 
of all, the era of in\x'ntit)n which began in the last 
century. Each of these periods has been preceded by 
a period, sometimes centuries in duration, when eco- 
nomic progress was almost inappreciable. Eollowing the 
period of development which culminated during the 
early centuries of the Roman Empire there was a j)eriod 
of marked and lonfr continued retrogression, 



P/unsis of lu-ouoiitic Ori^-iiiiizatiou. 135 

3. The groi^'th of cconoinic life Jias been iutiniatcjy re- 
lated to t/ie i^TO-u'tf of other pliases of soeial Ife, and to 
the state of intelleetiial developuient, particularly as 
sluKoii ill t/ie development of the industrial arts, lu-o- 
iiomic histoi"}' is a constant illustration of the i-clationsof 
economic life to the general life of society as stated in 
Lectures IJ-III. The economic life of Rome at each 
stage of its development was the direct outgrowth of 
political conditions ; just as intimate were the relations of 
the economic life -of the early middle ages and feu- 
dalism, the gild s\stem and the growth of the power of 
the towns, the mercantile s}-stem and the growing power 
of national go\ernments, the modern economic s)stem 
and the de\'elopment of the industrial arts, itself a 
result of the de\-elopment of physical science. 

4. As a result of the relations of economic life stated 
under 3. We find that the form of ecououne organirj.a-^ 
tion existing at an)- Iww^ presents tivo more or less dis- 
tinct phases \ (a) it is the counterpart of the existing 
political organization, the result of the conscious mould- 
ing action of the political power ; (b) it is the uncon- 
scious outgrowth of the conditions of external nature 
and the state of development of the industrial arts in 
connection with which it exists. The former may be 
termed the conscious or couipnlsory phase, the latter the 
unconscious or spontaneous phase of economic oi'ganiza- 
tion. The gild system, and the general form of 
economic organizatic^i during the period of the mer- 
cantile system, especiall}' on the continent of luirope, 
are good illusti'ations of compulsory organizations, the 
modern industrial system of spontaneous organization. 

NeitlitT tlie division iiiaile nor the tciiiis used almve art', liowcver. 
entirely accurate. Tlie orfiani/.ation of eciononiic life in the early mid- 
dle ages, ior e.\anii)le, was tlie cdiniteriiart oi' the social and political 
organization of the time, but was in no sense tlic result of any conscious 
action of a controlling i)olitical i)o\\ei'; I'ustom, the outgrowth of cir- 
cumstances, and not of any conscious juiriiose in regard to economic 
organization, was the regulating force; and at all times the social and 
l)olitical exercise an imimrtant indirect inlluence on the economic or- 
ganization in many ways not present to the minds of those wlio control 
the politic)"! power. On tlie other hand nil those forms of economic 
organization (c ;/. the factory system, trusts) wliich arc tlie jirochK't of 



136 Sta^'cs j)i lu'0)iouiic Progress. 

the action ol (n-ivate individuals, iiru the lesult ol a conscious purpor^e 
on tlie part of sucli indiviiluals, l)ut, usually, a i)uri'09e directed to 
securing private gain, not to proilucing new forms of econonii<- or- 
ganization; sometimes, however, the latter iiurpose is present. 

5. Classificatioii of the Stages af Eeonoviie Develop- 
i/ietit. There may be .several clas.sification.s determined 
by the phase of economic organization (compulsory or 
spontaneous) upon which emphasis is hiid. The most 
common (see Schonberg and Kly) refers principal!)' to 
the development of the spontaneous organization and 
distinguishes h\'e stages. (a). Hunting and Jjs/iing 
sttrge, man entirely dependent on the l^ounty of nature. 
For the general characteristics of this stage see the 
account of the economic life of savage peoples in 
Lectures III.T\\ (b). Pastoral stage. Man begins 
to control the forces of nature with the result of in- 
creasing the suj^pl)- of things fitted for his use; popu- 
lation is nomadic, (c). Agricultural stage. Man's 
control over natural forces gi'eatly increased ; perma- 
nent settlements begin, b'or the general characteris- 
tics of stages (b). and (c)., see the account of the 
economic life of barbarous peoples in Lectures III.-I\'. 
(d). Trades and eonnneire stage. The main economic 
characteristics are the di\-ision of occupations, and the 
growth of commerce and of a money economy. No 
ancient civilization (see account of the economic life of 
non-European civilizations, in Lectures III.-I\'., and of 
Greece and Rome) passed beyond this stage, and in the 
history of modern Europe it includes the whole period 
from the rise of cities to the industrial revolution at the 
end of the last century, (e). Industrial stage \ marked 
by the rise of modern forms of industr}' with all their 
accompan3'ing characteristics. It covers the present 
century. 

It should lie noted that the successive stages are not exclusive hut 
cumulative, the life of the lower stages continuing to exist to some ex- 
tent even after higlier forms have become predominent. Further- 
more, stages (b). and (c). should be regarded rather as ditferent phases 
of the same .stage than as successivestages. 

Another classification of the same general class rests 
entirel)- upon the character of the mechanism of ex- 



Stdi^rs ill lu-ouoviic l^ro^-rcss. 137 

change, distinguishini;- (a), the stage of l)arter ; (h). tlie 
stage of money ; (c). the stage of credit. Schmoller, on 
the other hand, in liis classification lays emphasis upon 
wllat we have termed the compidsory phase of economic 
organization, distinguishing successive stages in which 
economic life has been controlled and given its special 
characteristics by (a), the tribe or clan ; (b). the village ; 
(c). the town or city; (d). the ]M-ovince (Territorium) ; 
(e). the nation ; (f). the union of nations. 

Scliinollei's point of view maybe .seen from the lollowing i|Uotatioii3. 
" In eyei'y phase of economic development, a guiding and controlling 
part belongs to some one or other political organ of the life of the race 
or nation." (Mercantile System p. 2). "The idea that economic life 
has ever been a process mainly dependent on individnal action, an 
idea based on the impression that it is concerned merely with methods 
of satisfying individual needs,— is mistaken witli regard to all stages 
of human civilization, and in some respects it is moi-c mistaken tlie 
furtlier \\ e go back." (ib. pp. .?-4). 

Bucher's classification combines to some extent the com- 
pulsory and the spontaneous phases of economic or- 
ganization. The determining, element is the way in 
which production and consumption are connected, the 
method by which the product is transferred from the 
producer to the consumer. J^'rom this point of view he 
distinguishes three main periods, (a). The period of 
domestic economy- The producers and consumers are 
identical, there is no exchange, the whole process of 
production and consumption is completed within the 
producing group, (household or tribe). This period 
lasted from the beginning of economic life to about the 
beginning of the eleventh century, A. D. (For a criti- 
cism of this view as applied to (jreece and Rome, see 
Meyer E. Die Wirtschaftliche Eiitivickeliuio- des 
Altcrtums,\w \\\^ Jahrb. f. Xationalock,\\. Stat. Series 
111., Vol. IX., p. 696). (b). TJie period of toicn or city 
economy. A separation has taken place between the pro- 
ducer and the consumer, exchange has consequentl}- 
come into existence, but it is a direct exchange, no in- 
termediaries having arisen between the two. (c). 77/0 
period of national economy. Production is for the gen- 



l3iS h'liiidauu'iUal liiidciicii's in licoiioiiiic I'' ivt^rcss. 

eral market and numerous intermediaries, usini;" a com- 
plicated meclianism of e\chanL;'e. ha\e arisen between 
tlu' producer and the consumer. 

Some iilcii 111 till' ichitiun,- lictwi'cn Ihoc \ai'iou> i-l;ts^ini';iU()iis niay 
be obtiiiiicU from tlic I'ollowing tiibiil.ir stiitumoiil. 



S( II()MJKI{G. 
1. 


s< 


II()M'.KI{G. 


S( II.MOM.KI!. 


iii ( IIKIi. 


Ilniitiii^- iuid Fish- 
ii),n- stagi'. 

I'astoral 
Stajri'. 


stage 

ol 
I'.artcr. 


Tribal 
Kcoiioiiiy. 


Domestic, 
Keoiiomy. 


Ag-ricult iiral 
StaK->'. 


\illage 
I'j-iiiioniv . 

Town or ( il\ 
Kcohoniy. 




Trades and ( onimer 
<ial staire. 


siauc of 


Town of ( ity 
iM'ononiy. " 


Provincial Kconomy. 

National 
Iv'onoiny. 




Iiidu.sti'ial 

Stati;c. 




Stage of 
Credit. 


Nalion.al 
Kcon(jni.\ . 


Kcononn of I'nion 
of Nations. 





6. Fundm)icntal tendencies in economic de\'elop}ne}it. In 
reviewing- the course of economic histor}- tlieie are ob- 
serval:)le at least two such tendencies, which seem to l)e 
essential conditions of econouiic ])r()(;-ress ; (a). An 
increasing- control b}' man oxer nature; (b). An in- 
creasing de|)endence of man upon man. 

Coming iiropei-ly under (b). but, perbaps, re(|uiring seiiarate .statement 
is tlieieiuleney towards a lengtbeningof tlie i)rodiictive pi'orcss involv- 
ing an increasing dependcNice ol present upon p.-ist l.-ibor. 



LECTURE XX. 



ORGANIZATION OF MODERN ECONOfllC LIFE. LEGAL FRAflE^ 
WORK. 

]3rief accounts of tlic rights of freedom and prixate prop- 
erty as they exist in this country may be found in 
Kent's Comniciitarics o/i Aiiurican Laio, Pts: I\^ and 
V. and PoMi'.KoN' J. N. An iiitrodnctioit to the Study of 
Municipal Lai^\ W. III. 

A discussion of the \'arious rights inckuled under the 
freedom of the indi\'idua] may be f(_)und in Schonisickc; 
(;. Handb. d. Pol. Ock. I. i. and Va.\ R. T. An iu- 
trod/ictio/i to Political Plcouonty, W. I. Ch. IX. An 
account of the i"esti"ictions on propeit)' in huul (hiring 
the feudal period, of the removal of these restrictions, 
and of the present state of the English law of property 
in land ma)' be found in Pollock F. Phc Land Paius, 
Brodekick Ci. C, J\nj:^'lisli Pand and English Pand- 
lords. Nicholson J. S., Principles of Political Econ- 
omy, Bk. II. Ch. \'I I., g"i\es a brief account of the same 
topics. 



The fundamental elements which distinguish the or- 
ganization of economic life to-day from earlier forms of 
organization are the following, i. The freedom of the 
individual, subject ho\ve\'er to the enforcement of con- 
tracts. This freedom includes (a) freedom of the per- 
son, (b) fi'eedom cjf moxement, (c) freedom in the choice 
and pursuit of industr)-, (d) freedom in the exchange of 
commodities, (e) freedom of contract. 2. Private pro- 
perty including the right of bequest at death. The right 
of property includes (a) the right of acquisition, (b) the 
right of retention, (c) the right of alienation. 



140 Rcsti-ictioiis on Individual Freedom. 

Tlie^o rights wi-ri' main I'lcinenis in the idea of national riglits wliicli 
l)layed t^ucll an inii>ortai)t part in the overthrow ol tlie system of gover- 
niental regulation. The American Declaratiou of Independence de- 
clares it self-evident. "That all men are created equal : that they are 
endowed by their creator with certain imalienalile riglits: tluit among 
these are life, liberty, and the pursuit of happiness." The National 
Assembly in France in its declaration of ITiSlt, included among the nat- 
ural rigiits of man, liberty, property, security, and resistance to oji 
pression. Many of the State constitutions in this country contain sinii- 
lar<lecla rations, (see F. .T. Stimson, Amevican Stdfutc L(ur). 

Notwithstanding- the fact that these ri<;"ht.s arc com- 
mon]}' regarded as natural rights and are defended on 
this ground, and notwithstanding" the fact that the ex- 
tent to which they exist is a fundamental characteristic 
of modern economic organizationt, the}' are mjt and 
indeed cannot be absohite in character. They are in 
their present form historical products, and are even now 
subject to important limitations. 

During the last thousand years there has been .-i ('onstant growth 
of individual freetlom and the right of i)rivate property. By the side 
of the serf labor on the manor developed the relatively free labor of 
the towns, which, iu turn with other causes, led, through the introduc- 
tion of money payments, to the subslitiution of rent payinij tenants 
and wage-receiving laborers for the seifs of the manor. Freedom, 
however, was far from complete, owing to the restrictions on fi'eedoni 
of movement, on the choice of occupation, and on tlie right of combi- 
nation, restrictions which have disappeared only in the present century. 
I'livate property in land was incompatible with the feudal system 
and has only developed as tliat system disappeared through the sub- 
stitution of money pa.\ nients for scr\ ice and the growth of the modern 
state. Feudal tenures \\ ere abolished in England l)y an act of IfiGO. 
According to the theory of the Knglisli law today, th<' ownership of 
the laud is In the King, individuals holding it only by grant from him. 
]\Iore or less serious obstacles still exist, also, to the full exercise of 
rights of property in land. Ui France i)rivate property in land has 
important limitations in the laws of inheritance. 

'J7ic principal restrictions on indi-eidnal freedom a}id 
the right of private property which exist today may 
be summarized as follows: i. Inherent rest) ictions 
i . e. restrictions which grow out of the system of tree- 
dom and private property itself, (a) The freedom of 
each must necessarily be limited by the equal freedom 
of others, a fact involving most im})ortant restrictions, 
(b) The very making of contracts involves at least a 
temporary restriction on the freedom of the contract- 
ing parties, and might involve a permanent and esseu- 



I 



ResfricfioNS on fiuiividual Frccdovi mid Properfy. 141 

tial limitation of such freedom, to a\'oi(l which it is nec- 
essary to Hmit the original right of making contracts, 
(c) The prop'erty right of a present owner may be ex- 
ercised in such a wa}', especially through bequest, as to 
limit the propert\' rights of future owners, thus again 
necessitating a limitation of the jM"op(:'rtv right in the 
interest of the propert}' right itself. 2. Restrictions in 
the interest of the family. Lender this head come laws 
of inheritance which provide not merely for intestate 
succession, but limit the right of bequest, and which, in 
general, apply more particularly to real estate. 3. Re- 
strictions necessary to the maintenance of the state, (a) 
The right of taxation, limited only by the requirement 
that it be equal as between individuals, (b) The right 
of eminent domain. 4. Restrictions in the interest of 
pnblic 7vell being, (a) I^ncouragement of inventions 
by means of patents granting exclusive use of the in- 
vention for a limited period. 

In the United States a patent runsi^eventeen _\eai>,an extL-nsidii beinjj 
possible only by act of congres.i; P^ngland, fourteen yearf, witli the 
possibility of extension for seven or fourteen years by act of the Piivj- 
Council; France, five to fifteen years, accord! nL' to the aniuunt paid; 
Germanj-, fifteen years. 

(b) Restrictions on commerce (protectixe tariffs), for 
the purpose of securing an increase or better distribu- 
tion of protective powei' and wealth, and of maintaining 
a high standai'd of living, (c) Restrictions on immi- 
gration for the purpose la.st mentioned, (Chinese exclu- 
sion acts in the United States), (d) Restrictions on 
certain industries either in themsehes injurious (liquor 
business), or which may be managed in such a way as to 
involve injury to public well being (railways, etc), (e) 
Restrictions on certain occupations in which lack of 
skill may have serious results, (pharmacy, medicine, 
law), (f) Restrictions on contracts involvnig injury to 
public well being (anti-trust laws), (g) Resti'ictions 
directed to the maintenance of safe and healthy condi- 
tions of industry and life, (h) Restrictions for the 
IDrotection of classes not in a position to care for their 



142 Restrictions on Individual Freedom and Propeity. 

own interests, (i) Restrictions on pii\ate in the in- 
terest of public enterprise (post office). 

In tlie above (li.scussioii it is not ot course meant to cover all the rights 
included under tlie freedom of the individual or all the restrictions on 
those rights existing at the present time, but merely the rights and re. 
stri<'tions which are most importimt fmrn an economic standpoint. 



LECTURE XXI, 



ORGANIZATION OF MODERN ECONOMIC LIFE. PRODUCTION. 

There is not ver\' nuicli in economic literature that 
bears chrectl}' on the organization of production from 
the point of \\q.\\ of tlie present lecture. The fullest 
treatment be found in LiaiR J. Prodnktion u Kon- 
siiviption in d. ]\dksicirtscliaft. Something will be 
tound in Makmiall A. Principles of Economics, Bk. 
\\. (especially Ch. XII) and in Ki.einwachter Fk. 
Die X'olkswirtschaftliche Prodnktion iin Allgemeinen in 
ScHoNJii:KG's Handb. d. Pol. Oek. A description of 
corporations and of the organization of credit as a factor 
in production ma}' be found in Cakkoli. E., ]\<. Prin- 
ciples and Practice of Finance. 

Fistribntion of /Productive J^oicer. 

In a nation where the economic organization is based 
uyxni the legal system described in the last lecture, the 
distribution of productive power and the organization of 
productive enterprises will be the result of an immense 
number of individual choices, each individual being 
guided by the desire to advance his economic interests 



Distribution of I^rodiictivc Pon'Cf. 



143 



(/. c. to obtain the largest i-eturn for a given expenditure 
of labor and wealth), but subject to the restrictions 
mentioned, to others growing out of the circumstances 
of each individual, and to the conflicting influences 
of other than economic interests. Under mydern 
conditions when industry is organized on an inter- 
national basis a view of the distribution of productive 
forces between different industries should take in the 
whole world of related industry, but even fairly accurate 
statistics are available for only a few countries. The 
difificulties are the lack of ;n\ uniform classification and 
the omission of subsidiar\' occupations. The following 
table, taken from Riimelin's Hcvdlkcningslclircxw Schon- 
bcrg s Handb. d. Pol. Ock. i., is perhaps as near an 
approximation to the facts as can be obtained, l^omes- 
tic servants are apparenth' not included in ihc classifi- 
cation. The figures arc based on censuses taken during 
the years 1880-1882 but there has piT)babl)- been no sub- 
stantial change since that time. 



NrMHKi; 01 1* 



t.SUX.S (000 OMITTKU ) WHOSK CHIEF 
OCCUPATION IS IN 




(1) A (-(jiisidd'aliU' iiurliuii of Uiesc sliould prcbably bo classeti 
Liiidei' ai'iiculture. 



144 



I lutividiial J^rodiictio)i. 



()k(;anization of IxnrsTKiEs from thk Point of \mf\v of 
Pkoductiox. 

From the point of \'ie\v of organization we ma\' divide 
industries into two main classes, i. Those carried on 
^ by a single individual or 4 single famil)-. 2. Those 
carried on bya group of indixiduals other than a family. 
According as production is carried on in one way oi- 
the other we may term it an individual production or a 
group proditctiou. 

Individuii/ Production. A great number of those engaged 
in industry are still working in this way. It exists largely 
in the minor branches of transportation, in the smipler 
forms of mechanical industries, in small retail trade, 
in farming, in domestic service (this should include 
all household labor whether performed by paid servants 
or not), and in the liberal professions. In all except 
the last two classes mentioned however there is doubt- 
less a tendency for it to gix'e way to the group" enter- 
]:)rise. 

There are few titatistics as to the uuinber of iucUvidual enterprises. In 
the case of agriculture we can judge something from the size of tlie 
holding. In tlie following table column 1 shows tlie number of agri- 
cultural holdings under 50 acres each (unless otherwise stated) 
in the countries and at ilie times stated. The flgures except for 
Great Britain and Ireland (Statesman's Yearboolc V&)'t) and the 
United States (Census I8iJ0j are from the article on Bauerngut und 
Bauernstand in tlie Haudw'Vh. d. Siaatswiss. Column 2 shows in per 
cents, the proportion of the holdings given to all holdings above the 
minimum holdings given in the table. 



COUNTKY. 1. 

I w 

Belgium, (1880) \ 89.3,810 

(2) 
Holland, (1887) ■ 137,i).T2 

Oreat Britain, (188:t i f0i),422 

W 
Ireland, (1893) , 481,989 



2. 


CO0NTRY. 


1. 


-• 


98 


Hungary 


(5) 

•>,;;48.(jio 


95 


84 


United states, (1890) 


(8) 
i,;«8,.V2l 


•-'9 


71 


France, (1881--i) 


(6) 
4,738,.190 


9-2 


84 


German Empire, (188-2-3) . . 


(T) 
4,969,843 


96 



(1) These holdings covered 63 per cent, of the cultivated area. 
709,.566 (covering 23 per cent, of the area) were under 5 acres. (2) 2>a 
to 50 acres; 74,039 under 12 '< acres. (3) U' to 50 acres; covered 



p 



Croup Proiliiclion. 145 



probably al»oiit Ki per cent, of ihu cultivated area; 17-2,f37 (coveriiiL;- 
probably about 1'^ per cent, of the cultivated area) were less than r. 
acres. There were also 455,00.t "allotments," apparently not included in 
the figures for "lioldings," and most of them under 1/4 acre, (4) 172,8;>T 
undero acres. (5) about 7 to 43 acres. The figures are merely an esti- 
mate. (6) covered 38 per cent, of I he cultivated area ; 2,67-2,007 (cover- 
ing 2 per cent, of the cultivated area) were under 2'i acres. (7) covered 
about 44 per cent, of the agricultural area; 3,061,831 (covering about 
.1.5 per cent, of the area) were under .5 acres. (8) Does not include 
farms under 3 acres from which less than $.")00 worth of product had 
been sold during the preceding year. 

The only general statistics concerning individual producers in other 
brandies of production are those of the trades census of 1882 for the 
German Empire. The census included gardening, raising of animals, 
raining, stoneworking, mechanical and manufacturing pursuits, trade, 
and transportation with the exception of the railway, the post office 
and the telegraph. There were engaged in these industries, altogether, 
7,340,789 persons, of whom 1,012,886 were individual producers. The 
numbers of sueli producers in the trades mentioned would doulitless be 
relatively less in England or the United States, but when we take 
into consideration the occupations mentioned above, but not included 
in this census, individual producers would constitute a considerable 
proportion of all prdducers even in these <•ouIltrie^. 

(rronp Prod lit tio)i. Wherever men i^roduce in gi-oups 
we usually find a dixa.sion of functions, a portion supply 
the labor power, receiving in return a stipulated wage, 
not dependent upon the profit or loss in the enterprise 
during a particular period. This portion we may term 
the cmplovccs or the laborers. The other portion con- 
trols the organization and the management of the group 
supplies the land, buildings, tools, machiner)', and ma- 
terials, pays their stipulated wages to the laborers, and 
keeps to itself the profits or bears the loss, /. c. assumes 
the risk. This portion we may term the employing por- 
tion, or, treated as a unit the employer. The employer 
again ma)' be either an individual or a group of individ- 
uals. This group may be oi'ganized in a variety of ways. 
It may be a partnership (a simple combination of indi\- 
iduals), a corporation, or a branch of the government, 
national or local. 



There are various intermediate forms of organization between the 
partnership and the corporation combininar some of the character- 
istics of each (for a brief description see KleinwJichter and Lehr), but 
they are of minor importance and for our purposes may be classed as 
partnerships or corporations. 

As regards the relative importance of these different forms of 
employers, the only general statistics are those of the German trades 



146 Goi'crmnciit as au Riiiploy 



ceusus of l!^S2. That showed lor the mechauical and manufacturing 
industries 834,910 enterprises in wliich group production prevailed. 
Of these, 801,692, employing- •2,969,397 persons, were controlled by 
individuals; 28,693, emploj'ing 749,003 people, by partnersliips; 3,028, 
employing 288,033 persons, by corporations and lilic associations; 
845, employing 11,782 persons, by local governments; and 6rr2, employ- 
ing 54,574, by the state or imperial governments. The stalii^tics lor 
England and the United States would doubtless show a relatively 
smaller proportion of enterprises controlled by individuals and by 
government and relatively larger proportion controlled by partner 
ships and corporations. For the facts in regard to 55assachusetts 
see p. 115. 

irovernment as an Emploiivr. From an economic standpoint govern- 
ment itself is properly to be regarded as a productive enterprise, 
and both national and local governments are, within their own 
territories, the largest or among the largest employers of labor. Exact 
^tatistic^ are not obtainable, but it is [irobable that government 
(national and local) expenditures vary from about 7 per cent, of the 
national product in some countries to 16 per cent, or 17 per cent, in 
others. Looking at those branches of government activity which arc 
similar to industries carried on by private individuals and associations, 
national governments everywhere manage the postal service, combin- 
ing with it H larger or smaller portion of the express business, and, out- 
side of America, almost without exception, the telegraph and to a 
great extent the telephone service. In the greater part of the 
countries of the world (the I'nited States, the United Kingdom. 
Switzerland, Italy, and Spain the most important exceptions) the 
government operates at least a part of the i-ailway system. Practically 
the whole sjstem is under government management in the Geinian 
Empire, Australia, Cape Colony and Norway and a considerable 
portion in India, Austria-Hungary, Belgium (live sevenths), Brazil, 
Chili, Denmark, (three fourihs), .Japan, the Netherlands, Kussia, and 
Sweden. In many of the states of Continental Europe forestry is an 
important government indu.stry. In Prussia the government enters 
hu-gelv into mining, and in some states the government carries on 
important industries as a means of raising ta.xes, the production ol 
tobacco being monopolized by the government in several states, among 
them Austria, Hungary, and Italy; in France the government has a 
monopoly m tobacco, powder, and matches, but lets out the nianu- 
lacture of the last. Most national governments do their own printing 
and manufacture a large part of the equipment of the army and navy; 
many carry on manufactures of artistic goods, such as jjorcelain and 
tapestry. The following figures will give an idea of the vast size 
iif some of these industries in the more important states. The 
postal service in the United States during the year 1893-4 required an 
expenditure of $84,000,000, and employed over 100,^00 people, although 
a very large proportion of these did not give their whole time to the 
work; the English postal system (including the telegraph) involved 
an expenditure of $40,000,000, the French (including telegraph and 
telephone) about the same, the German $65,000,000 (employees 161,000). 
The government railways in Prussia involve an annual expenditure 
of $1.50,000,000 and employ probably 2.i0,000 men. The Prussian 
government expends annually over $8,000,000 on forestry, and $30,000,- 
000 in mining, and allied industries, employing over 50,000 men. 
The French government expends $13,000,000 in the manufacture 
of tobacco and employs about 16,000 people. These are perhaps 
the most striking examples of great industries carried on b\ national 



]-^ariations in the Oi-i^aiii:zation of Productive Groups. 147 



fjoveinnieuts, but similar instances oC great importance can be found 
n almost every country of the world. The industries just mentioned 
are exactly similar to indiistries managed by private individuals, and, 
with the excei:)tion of the post oflice of the United States, yield the 
governments which engage in them a prolit. Every national govern- 
ment moreover expends annually great sums of money on public 
improvements, the building and maintenance of 7o*'^^l'^> canals and 
harbors, the deepening of river channels and strengthening river 
banks, but the greater part of such work is probably everywhere 
done by contract and it \vi)ulil be impossible to say how far 
governments are direct employers of labor in this connection. .\s 
managers of the police and fire departments and the school system 
local ffovernments control large numbers of employees, Vmt much of 
their work is of a kind more strictly analogous to that of private 
business enterprises. Such is the construction and maintenance of 
streets, sewers, parks and public buildings. Tlie construction in 
connection with such undertakings is, however, ixsualiy, in this 
country at least, with the possible exception of streets, let out to 
private contractors. The water supply is everywhere, as a rule, 
' under goverunient management. The same might almost be said 
i>f the gas supply in England and on the continent of Europe, althougli 
it is very excci]tional in the United States. There are even some 
instances of the management of street railwax^s by the local govern- 
ments (Glasgow, Huddersfleld, Plymoutli, Blackpool). The following 
figures will give an idea of the immensity ot some of these uniler 
takings in great cities. In Berlin (18S"2-9:S) the expenditure in connec 
tion with the gas department amounted to over $3,000,000, not includ- 
ing payments on debts; in connection with the water works to about 
1? 1,750, 000. The largest city in the United States which manages its 
own gas works is Philadelphia. The exi)enditure in connecition with 
these works in IS'.H), exclusive of extensions and payments on debt, 
were nearlj' i!'2,O0o,0()ii: in connection with the water works, estimated 
on the same basis, about .'5(300,000. The corresponding iigiires for the 
Boston water works were about S.iOO.OOO, with about an equal sum for 
extension, apparently under government management; for Provi- 
dence (1894-5) $100,000, with about $90,000 for new construction under 
government management. In all its departments the city government 
of Providence paid out not less than $1,. 500,000 in salaries and wages. 
For an account of the industrial activity of governments, botli 
national and local, see Leroy-Beaulieu, P., L'Etat Moderixi et ses 
Fonctions (there is an abridged Knglish version). James, E. J.. The. 
Relation of the Modern Munlcipaliii/ to the Gas Supply; Pubs, of the 
Am. Eg. Assoc. Vol. I.; Bemis, E. W., Municipal Oivnership of Gas in 
the United States, Ibid. Vol. VI.; Shaw, A., Municipal Government 
in Great Britnin; Municipal Government in Continental Europe; 
Dolman, F., Municipalities at Work: and Sniait, W., The Municipal 
iVorl; and Finance of Glasgow. Ec. .lour. Vol. V. treat Of lo(;al under- 
takings. 

Variation in the or(jani::atioH of group production from the type above 
described. 1. In the division of functions between employers and 
laborers, it was stated that the laborers supplied only their own lal)oi- 
liower. This is not always the case. In trades not adapted to factory 
oi'ganization ( e. (;. those building trades immediately concerned \\ ith 
construction), or in trades carried on in the homes of the workers 
(house trades) the laborers frequently supply their own tools and in 
some instances a portion of the materials which they use. Statistics 
again are difficult to obtain. According to the German trades census 
of 18S2, out of 5,50:i,5'.J9 who found their chief o(-cupat)on in manufac. 



148 i obpcration. Comnnniistic Groups. 



tnre?, 479,526 persons wero employed under the house industry system, 
of whom 284.727 worked alone, and 6.3,274. with the assistance of 
131,525 lielpers(Schunl)erg- II , p. 434) . The division as to industries was : 
textile industries, 28G,4.")6: clothing: industries, 133,049; other industries, 
60,021. Those who worked alone seem to have been included in the 
figures for individual producers given on p. 145. It is in fact difficult 
to draw the line between the individual producer and the employee 
under tlie house industry system, the producing group under this sys- 
tem lacking definiteness of form and coherence. (.Schiinberg II., 
11. 433) . 2. In some producing groups the laborers themselves act as the 
managing body, working together and dividing the product according 
to some prearranged plan. The most important groups of this kind 
are the Russian ArWs, groups of workmen, who as a group or as 
individuals, iindertake the performance of certain work, the group as 
a wliole assuming the responsibility in either case. Siich groups arc 
rare outside of Russia, but exist to some extent in connection with 
dock labor and mining. (See article on Artelle in the Hmidw' b. d. Staats- 
wlss). The same thing is accomplished in another way, while preserv- 
ing the corporate or partnership form of organization, when the 
l:tborers themselves are the controlling shareholders or partners, thus 
doing away M'ith all essential distinction between laborers and em. 
ployer, although the formal distinction continues. This form of 
organization is known as producih-e co6perntion. Thougli there arc 
some successful instances of this form of organization in France, and 
though there .are in England and the United States many productive 
enterprises termed cooperative, real productive cooperation seems to 
be very rare, the term usually being applied to organizations in which 
the laborers are shareholders, but in which they do not have the con- 
trolling powers, or to organizations in which the shares are held by 
working-men who arc not, however, laborers in the enterprise, or to 
organizations controlled by other cooperative organizations, or to 
enterprises in which the employers allowthe laborers a share in the 
profits, in addition to their wages. Where the real cooperative form of 
organization has succeeded in i)rodu(;tionithaa been for the most part 
in mechanical trades which do not req.uire extensive machinery or a 
comiilicated form of organization, or in correspondingly simple agri- 
cultural piirsuits, such as the making of dairy products. Cpnccrning 
cooperation see the articles on Cooperation in the English Dictionartj 
»f I'oiUical Economy, and Prod nJctivgpnosxenschaf ten in the Handw't'h. 
(1. Stfiatawissenchoften; Barnard C. Cooperation as a Bvxinesn; Gilman 
N. P., Profit Sharinrj between Employer and Employee. (Ch. VI, sec. 11. 
See also index) ; .Schloss, D. F., Methods of Industrial Remuneration, 
iChs. XXIII-XXVII); Wright, C. 1)., A Manual of Distributive Co- 
operation (ti-eats also of productive cooperation, and is reprinted in 
the Report of the Statistics of Labor for Mass. 1886; Reports by Her 
Majesty's RepresentatitJes Abroad on the System of Co-operation in 
I'oreign Countries, \?,^; Giddings, F. H.. Profit .SAwrin.r; ( printed in 
Report of the Bureau of Stati8ti(;s of Eabor for Mass., 1886) ; Ely, R. T., 
The Labor Morement in America, Ch. VII; I'he History of Co-operation 
in the I'nited Slates, Vol. VI of the Johns Hopkins Univer.-ity Studies 
(especially the articles by Shaw and Bemis) ; Herbert-Valleroux, P., 
Les Associations Cooj)eratires en France et a V Etranger, Vol. VI., 
of the Revue d'Economie Politique contains several aixicles on 
cooperation in various countries of continental Europe, and A'ol. 
VII contains Le Mouvement Cooperatif en France dans les dix dernieres 
Annies, by Gide, C. Longuinine, W., Les Artcles et le Mouvement 
Cooperatif en Rufsi'e. Beatrice Potter in her Co-operative Movement 
in Great Britain hrmg?. out clearly the slight development of produc- 



I 



Differentiation of the Functions of t lie Employer. 149 

tive cooperation there. 3. Another form of organization which 
is too rare to exercise any influence on the organization of produclion 
as a whole, is seen in the communistic settlements which have existed 
■ and siill exist to some extent, particnhirly in the United States. See 
Ely, R.T., The Labor Movement tn America, Ch. II. Noyes. J. H.. 
History of American Socuilism.i. 

Differentiation of the functions of tlie Employer. This 
diffei-entiation may be said to have taken place both 
within and without the entei'pi'ise. (a). As an enter- 
prise increases in size it becomes more and more dif- 
ficult for a single person, or even two or three persons, 
to exercise the entire management, and the tendency 
is for a division to take place between what may be 
termed the genei^al management, including an oversight 
of the internal working of the entei'prise and the con- 
trol of its relations to other enterprises, and the actual 
administi'ation of details which are left to salaried em- 
ployees. This administrative force, exercising in part 
the functions of management, becomes veiy numei'ous 
in a great enterprise and in its lower gi'ades is hardly 
to be distinguished from the class of manual laborers. 
In the case of a corporation, although all the shai'e- 
holders are formally members of the employing body, it 
frecjuently happens that many of them, sometimes a 
large majority of them, take no active part whatever in 
the management, holding their shares simply as invest- 
ments and regularly transferring their voting power to 
others. The actual exercise of the employer's functions 
is left to the board of directors, who represent the 
shai'eholders most largely interested, and even within 
this boai"d thei"e is frequently a still smaller group of 
persons with whom the control of the enterprise practi- 
cally rests. In a corporation of this kind the chief 
salaried officials are usually more than administrative 
subordinates. They are entrusted with considerable dis- 
cretionary powers, their knowledge and advice are 
gi^eatly relied on, and they are sometimes themselves 
among the largest shareholders, (b). The employer 
while oi'ganizing and managing the industry and sup- 
plying the land, buildings, machinery and materials 



150 Banks as Factors in Prodnctton. 

necessan- for the employment of labor has come more 
and more to obtain from others the means of acquiring 
these things and even of advancing wages to the 
laborers. This may be accomplished either by borrow- 
ing, or in the case of a corporation by selling shares 
(those shareholders who actually have the control, 
being regarded as the employing body). This ma)' 
within certain limits be accomplished directly by a 
transaction between the manager of industry and the 
individual investor, but as a rule the parties are un- 
known to each other, and the bringing of investors into 
relation with those in need of their resources, and ren- 
dering available for industry the resources kept on 
hand to meet current expenses, have come to involve 
a somewhat complicated mechanism. The principal 
elements in this mechanism are incorporated banks, 
bankers, and brokers. Incorporated banks may be 
divided into two classes, sa\'ings banks and mer- 
cantile banks. Savings banks as a rule derive their 
resources exclusively from the deposits made w-ith them, 
such deposits representing in the main the savings of 
people of moderate means. In this way there are col- 
lected sums enormous in the aggregate (see p. 114) a 
large portion of which are loaned on real estate mort- 
gage security, the greater part of the remainder being 
invested in bonds and stocks, principally in the bonds 
of national state and local governments and of railways. 
The great bulk of their investments are, therefore, 
what may be termed long time mvestments ; the bank 
keeps a comparatively small amount of cash on hand 
and may, usually, requn^e notice of withdrawal of 
deposits. The mutual banks pay oxqv to the depositors 
their whole earnings, less expenses of management and 
the payments necessary to the maintenance of a reserve 
fund ; in the case of stock banks dividends on stock 
are also deducted. Mercantile banks derive their 
resources partly from their capital paid in by share- 
holders, sometimes from the issue of notes, but princi- 
pally from the deposit of the cash kept on hand to meet 



I 



luiiiks as Foi-tors in Proiiiicttoii. I 5 i 

current expenses. These deposits do not represent sa\- 
ings and are held, for the most part, subject to payment 
on demand (by means of checks), the banks payuig no 
interest or a very low rate of interest on the deposits. 
These banks seldom loan on real estate (such loans are 
forbidden to banks organized under the national law in 
this country), they may invest their capital and undi\- 
ided earnings in stocks and bonds, but the greater part 
of their investments are made by discounting short 
time (seldom over six months) commercial paper which 
represents loans to men in active business, to enable 
them to meet their regular expenses for the purchase 
of materials and the payment of wages, at a time when 
their own propertv is not in a form available for this 
purpose. 

The difference in Uie functions of mercantile banks and savings bankw 
comes out clearly in the following statement of the resources and Ha 
unities of national l)anks and savings banks in the United States, taken 
from the report of the Comptroller of the Currency for 1S94, pp. lid) 
and 308. Tlie figures represent miUions'of dollars. 



RESOURCES. ■ ; UIABILITIES. 

Nal'l Sav'gs Nat'l Sav'gs 

Banks. 15'ks. r4) | Banks. Banks. 

Loans (real estate) 77'.' Capital Stock (JOli :il 

Loans (.other than Surplus Fund 'li^ l.'ix 

real estate) -2.007 i-lf^ (7) ,, ,. „ «^ „,, .,.. 

Lndiv. I'rohts SO iO 

Circulation 172 

Due Depositors..." 1,74'2(5) 1.778 (.6) 

Due Banks 527 3 

Otlier Lia))ilities :«) \ 



Stocks and Bonds .. . 410(1) 779(2) 

Due from Banks ;;99 82 

Real Estate 08 37 (3) 

Money 37G ) 

4-J 
Other Cash Items 143) 

Other Resources 31 14 

Total 3,474 1,981 Total 3,474 1,981 



(1) Of these $226,000,000 were U. S. bonds. (2) Of these $109,000,000 
were U. S. bonds; $399,000,000 state, county, municipal, &c., bonds; 
$122,000,000 railway bonds and stocks; and $45,000,000 bank stocks. 
(3) Includes furniture and fixtures. (4) Of the savings banks 640 
were mutual banks (453 in New England, 182 in middle slates, 1 in tlie 
southern states, 10 in the western states; total resources $1,691,432,501, 
deposits $1,538,305,070), and 378 were stock banks (18 in Vermont, 7 in 
middle states, 49 in southern states, 211 in western states, 93 in Pacific 



I S2 Brokers and Bankers. 



states; total resouiccs $-289,311,688, deposits $-239,6-2S,172). With the 
exception of Caliloniiii banks (the resoui'ces of which are about 50 per 
cent, of the resources of all stock banks) the stock banks have a very 
small ])ropoition of loans on real estate. This is pariiculaily true in 
tlio west where the slock savings banks would seem to coi respond 
prettv closely to mercantile banks. (5) Practically all subject to ije 
drawn against by check. (6) S-29,&71,962 subject to check, all in stock 
banks, and $26,622,(il0 in Illinois. No deposits subject to check in the 
stock banks of Vt., N. C, La., la., Minn., N. M., AVash., or Cal. 
(7) $8.1,856,723 were made by stock banks. 

Brokers may be divided into three classes, i. Stock 
brokers whose business may be (a) speculative, buying 
and selling stocks, either for themselves or as the 
agents of others, in order to make a profit out of price 
fluctuations (it is in this connection that stock ex- 
changes have developed, which, while giving use to 
serious evils, have without doubt rendered securities 
more marketable and thereby encouraged investment) ; 
(b) the sale of stocks and bonds to individuals, banks, 
insurance companies etc., to be held as investments. 2. 
Note brokers, who act as the agents of borrowers in 
getting their notes discounted at the banks. 3. Mort- 
gage brokers who act as intermediaries betweeii bor- 
rowers and lenders on real 'estate usually combining 
with this the business of dealing in real estate itself. 
Among all classes of brokers it is common to find a 
banking business combined with that of brokerage 
proper. Private bankei's also frequently act as brokers. 
The larger among these firms control very large 
amounts of capital and play an important part in taking 
up large loans, to be afterwards placed with other 
bankers and brokers and through them with the public ; 
in supplying the means for the organization of great 
enterprises ; and in the carrying through of great com- 
binations. 

In addition to the above principal credit agencies should be mentioned 
building loan associations (p. 114) whose resources are the accumula- 
tion of small savings and are usually let out on mortgage security to 
be used for buildinjj purposes; trust companies, which in addition to 
doing a banking business act as trustees with whom e. g., borrowers 
may deposit, for the benelit of their creditors, the mortgage or other 
security ottered for the loan which they seek; mortgage companies 
which are organized for the purpose of lending on mortgage, obtaining 
their resources from the capital contributed by their shareholders. 



Hank Credits. i 53 



anil various lornis of cooperative credit associations, especially com- 
mon in certain P.uropeau countries, organized either on the prin- 
ciple of building loan associations (except that the funds are used lor 
purposes other than liuilding) or with a view to obtaining loans on the 
joint responsibility of the association on more favorable terms than 
would be possible for the individual members. (See the aiticle on 
banks in the English Dictionary of Political Economy; Peters, E. T. 
Cooperative Credit Associations in Certain European Countries, ie|)ort 
to U. S. Dept. of Agric. Misc. Series No. 3; VVolflf H. W. Peoples Hanks; 
tlie various articles mentioned under Kreditgenossenschaften and 
Landwirtschafiliches Kreditwesen in the Handw't'b. d. Staat Swiss.) 

It is important to emphasize the fact that the function 
of banks, and the alHed factors, in production is not 
confined to collecting money and rendering it available 
for productive uses. Owing to the fact that in their 
notes, and deposits which can be drawn against by 
check, banks possess forms of credit which are available 
for all purposes, and owing to the fact that, as a result 
of settling accounts between banks by a balancing of 
indebtedness, (See lecture XXIII) they are called upon 
to redeem in coin only a small portion of their obli- 
gations, they can extend their accommodation far beyond 
the amount of money which it would be possible for 
them to control. It thus becomes possible for every 
one through the agency of banks to obtain on the 
security of the goods which he possesses, or in exchange 
for the debts which are due him, monev or the equiva- 
lent of money. 

The following will illustrate liow accommodation may be atforded by a 
bank without the use of money. A person goes to a bank and gets 
his own note, or a note which his debtor has given him, discounted. 
The bank credits him with the amount as a deposit against whicli he 
can draw by check, the greater part of which checks are not paid in 
money but offset against debts due the bank from other sources 
(lect. XXIII). Some discussion of credit and banks as factors in pro- 
duction will be found in almost every general work on political 
economy. Among articles and works bearing specially on banking 
may be mentioned: Atkinson E., Bank, Functions of, in Lalor's 
Cyclopaedia of Pol. Sc, Pol. Ec, and (J. S. History; What is a Bank, in 
Economic Tracts, First and Second Series (Putnam's). Dunbar C. F., 
Tlie Theory and History of Banking. Macleod H. D., The Elements of 
Banking (chs. V-X). Gilbart J. W., The Histoi-y, Principles, and 
Practice of Banking. AVhite H., Money and Banking. For the practi. 
cal details of banking sec Patten, C. B., Practical Banking. 

As a result of the differentiation of the functions of the 
employer as above described we find that almost every 



I 54 C /nssrs C ontribntitii^- to Piodiictioji. 

productive enterprise is dependent upon elements de- 
rived from a great variety of sources, supplied by per- 
sons who have no acquaintance with each other, sep- 
arated perhaps by thousands of miles, many of them 
unconscious of any relation to the enterprise in ques- 
tion, all the elements, howe\'er, harmoniously combined 
under the control of a single manager, or group of man- 
agers, for the attainment of the purpose in hand. In 
view of the same discussion we may now enumerate the 
following more or less distinct classes of persons who 
take part in production, i The land owjier. 2. The 
capitalist, who furnishes the means of obtaining the 
plant, the materials and ad\'ancing the wages. 3. The 
manager or entrepreneur. 4. The administrative force. 
5. The manual laborers. It follows too that in the 
terms "individual production" or "cooperative produc- 
tion " it is not meant to imply that all the productive 
tactors are supplied by the same persons (land may be 
hired or resources borrowed) but merely that in the en- 
terprise in question they are brought under the control 
of the same person or persons. 



I 



LECTURE XXll. 



THE MECHANISM OF EXCHANGE. MONEY. 

The best general introduction is Jevons W. S. Money 
and the Mechanism of Exchange. Other excellent 
works are Walker F. A. Money. Nicholson, J. S. 
A Treatise on Money published in connection with his 
essays on monetary problems. All the text books on 
political economy include an account of money and its 
functions. For an account of the development of 
money in this country see Weeden W. B. Indian 
Money as a Factor i?i Nezv England Civilization (in J. 
H. U. Studies, Vol. II); Economic and Social History 
of A' e 10 Englaiid. Bruce P. A. The Economic History 
of Virginia in the Seventeenth Ccjitnry. Sumxer W. 
G. History of American Cnrrency. White H. Money 
and Banking. For paper money in particular see 
Phillips H. J. Historical Sketches of the Paper Money 
of the American Colonies Prior to 1789. Rider S. S. 
Bills of Credit or Paper Money of Rhode Island (R. I. 
Hist. Tracts No. 8). Knox J. J. United States Notes. For 
a concise account of the monetary systems of the world 
see Muhleman M. L. Monetary Systems of the World. 
It contams an equally concise statement of the princi- 
pal facts in the monetary history of the United States. 
A statement of. the monetary units and the principal 
coins of the different countries may also be found in 
the annual reports of the Director of the (U. S.) Mint, 
or in the current numbers of the Consular Reports 
published by the Department of State (U. S.). Dunbar 
C. F. Laws of the United States Relating to Cnrrency, 
Finance, arid Banking from 1789 to 1891 gives all that 
is essential in legislatixe enactments in this country. 



I 56 Functions of Money. 

AIoxEV AS A Mf:dium of Exchange. 

The primitive means of effecting exchanges is by barter 
i. e. a person having a commodity to dispose of seeks 
out a person who desires the commodity which he has, 
and has the commodity which he desires, and effects an 
exchange. It is evident that as divisions of occupations 
and hence the number of exchanges, increase this pro- 
cess must involve great difficulties, that these difficul- 
ties would be immensely increased in the case of 
indivisible articles of considerable value in exchange for 
which a variety of commodities were desired, and that 
under anything like the modern system of economic 
organization they would become practically insurmount- 
able. In order to overcome the difficulties of what has 
been termed "the want of coincidence in barter" 
people come to accept in exchange for the commodities 
which they have to dispose of some commodity which, 
being very generally desired in the community, they 
believe will in turn be readily accepted in exchange for 
the commodities which they desire when an opportunity 
for exchange arises. In this way a commodity or a 
number of commodities come to serve as a medium, or 
media, of exchange. When in any community a com- 
modity has come to be regularly and generally used in 
this capacity it is termed money. 

Other Functions of Monev. 

When a commodity has come to be used as a medium 
of exchange, i. e. to be money, it follows that every 
other commodity is more frequently exchanged for 
money than anything else. It becomes customary, 
therefore, to express the exchange values of other com- 
modities in terms of money. Money thus comes to fulfil 
the functions of a measure of value. A person desiring 
to secure by loan a variety of commodities would find it 
more convenient to borrow and to repay money rather 
than the particular commodities desired. In this way 
loans and all contracts for future payments come to be 



Evolution of Gold and Silver Coins. 157 

made in terms oi money which serves as a standard of 
value i. e. as a measure of value as between different 
tunes as contrasted with a measure of value as between 
different commodities at the same time. Most forms of 
wealth do not have great durabilit}-. A person desiring 
to accumulate wealth would desire to turn it into those 
forms which are most durable, least liable to depreciation 
in value, and most readil)' disposable. It is evident that 
the mone)- commodit}' has the last mentioned qualit)' 
in the highest degree and will therefore, other things 
being equal, constitute the best stoir of value or repre- 
sentative of loealtli in o-citcral. This is particularly true 
in the case of accumulations intended for use in the 
near future. 

'riie abovu are the tenii.s by wliicli the lunetioiis ol money ai'e u-ually 
(le>iigi)atecl. For reiis^ous wliicli will bcconu' evident later nionc)- 
cannot be a measure or standard of value in precisely the same s-eiisc 
that a loot iis a measure of length or a pound a measure of weight. 
With a view to emphasizing tliis differeiu;e F. A. Walker has proposed 
to substitute the term common denominator of value for measure of 
mine and standard of deferred pai/tnents for standard of value. There 
i.s no doubt that ^V-a ker is riglit as to the fact but it is doubtful whether 
it is wise to attempt a cliange in Uie generally accepted terminology. 

AoLUTiox OF Gold .vnd Silver Coin Money. 

At different times and places a very great variety of 
commodities have served as media of exchange (See 
Jevons Ch. IV.). Among the early colonists of New 
luigiand wampumpeage (strings of shells used by In- 
dians as ornaments) first ser\'ed as money; and for a 
long time certain of the more important agricultural 
products were used in this way. In V^irginia tobacco 
was for over a century almost .the onl}^ kind of money 
used and it continued to circulate up to the end of the 
last century. It is evident however that different 
commodities possess in different degrees the qualities 
which are desirable in money and that those commodi- 
ties which possess these qualities in the highest degree 
will gradually supplant the others as the money com- 
modities, from the fact that the}- will be more readily 
i-eceived as such. Jevons (Ch. V.) enumerates as fol- 



158 Qualities Desirable in Money. 

lows the qualities desirable in money, i. Utilit}" and 
value. Both of these qualities might perhaps be 
summed up m the term aeeeptability, which is the fun- 
damental 'requisite. 2. Portabilit)-. 3. Indestructi- 
bilit)-. 4. H()nK)geueity. 5. Di\-isibility. 6. Sta- 
bility of value. 7. Coguizabilit) . It will be found on 
examination that among commodities which e.\ist in 
sufficient quantit)' to render possible their general use 
as va(n\Ki\, gold ajid silx'er {t\\c precious metals) possess 
these qualities in a higher degree than an\- other com- 
modities, and that, consequently, the}' have come into 
almost universal use as mone}' among civilized peoples, 
their suitabilit)' for this use being immenseh' increased 
by coinage which provides a government guarantee of 
the weight and fineness of the metal in the ct)in, a guar- 
antee which within recent times, among the more 
advanced industrial nations, has become absoluteh' 
reliable. 

^n.U.'iidinrij and ioheii coins ;iie coin.- nf minor ileuoiiiiiiiitions the value 
of the metal in which is les.* tlian the f.ii'e value of the coins, the value 
of the coins theniselves being kei)t lip liy conveitibilit\ Into coins ol 
4 full value. 

Coinage vaay hi.' I. /'rev. J. limiieif. Under tlie lir-l >y<teni the govern 
nient coins all metal brought to it for coinage (in some countries 
//r«<M<7o(ts?y/ in others for a small charge): under the second coiuag;e 
is usually on government accouni /. e. the government usually 
purchases andcoin^ such an amount of metal as seems to it desirable. 
The coinage of the full legal tender, standard, metal is usually free, 
but governments have frequently coined on their own account full 
legal tender coins of a metal lor which coinage is n>.tfree. Subsidiary 
and token coins are coined only on government account. When the 
difference between the nmount ol metal which it is necessary to bring 
to the mint to obtain a certain (juautity of coin and the Jimount of the 
metal contained in such <|uantity of coin is greater than the cost of 
coinage the diffeience is termed .s<'«iovY/,yc, which is tlierefore a profit 
to the government. Seniorage may also arise wlicn the government 
purchases the metal which it coins il the iiuautity of metal which ran 
be purcha.«ed by a given quantity of coin is greater than the amount ol 
metal which goes into siu-li coins. 

( r()\ernments. als<\ have sanctioned the use of one t)r 
both of these metals as money not onl\- by regulating 
the coinage but by declaring them to he legal tender 
in payment of debts, which does not however exclude 
contracts specifying other modes of payment. 



Paper Money. ^ 59 

\foniiy of Accoun*. It sometimes happen? that prices are expressed 
and accounts kept in monev denominations different from the denom- 
ination, of the money in actual circulation; the former constituting- 
merely a money of account. The money unit again may he different 
irom both the money of account and from any coin in circulation. Thus 
in the Anglo-Saxon monetary system the money unit was a pound 
weight of standard silver, practically the only coins in circulation 
were pennies, each of which was suppo^etl to contain a specific portion 
of a pound of silver, while the usual money of account was the shilling- 
representing a specific number of pennies (Jevons Ch. VIll). 
Throughout the colonial period, and in some instances even later, the 
money of account in this country was pounds, shillings, and pence, 
while the coins in nctual circulation were Mlmo-t exclusively Spnnisli 
dollars and their snlidivisions. 

1'aim:i>; Monev. 

In addition to the commodity money (now coin money) 
above described there have been and are in circulation 
in every advanced industrial country various kinds of 
paper money, which, the material of which they are 
composed having practically no value in itselt, must 
derive their value from some outside source. Paper 
money may be divided into two general classes, accord- 
in «■ as it is or is not convertible into coin on demand 
the question of convertibility being wholly a c|uestion 
of fact. 

Conveitible paper money exddently derives its value 
from the fact that it can at will be exchanged tor coin. 
This does not necessitate that the redemption agency 
should keep on hand an amount of coin equal to the 
amount of notes outstanding but merely that it shouW 
have coin sufficient to redeem such notes as are actual)}' 
presented for redemption, which, if there be general 
confidence in the convertibility of the notes, may, at 
any o-iven time, be a very small proportit)n of the total. 
If the coin kept on hand does equal thetull amount of 
notes outstanding these notes become merely represen- 
tative money. The light of issuing convertible paper 
money is to-day confined practically to banks (on speci- 
fied condition.s) and to national governments. 
Inconvertible paper money, ma\- be accepted in ex- 
change for commodities and consequently have value 
from a great variet\- of causes among which may be 
mentioned the following; receivability for ta.xes, hope 



l6o Inconvertible Pa per Money. 

of future conxertibilit)', the fact that it has been made 
legal tender in payment of outstanding debts, habit, the 
the lack of any other circulating medium, patriotism, 
the promise of redemption in something other than 
coin. It is impossible however to make any statement 
as to what will be the value of inconvertible paper 
mone)', the \-alue in each case depending upon the 
particular circumstances of time and place, particularl)- 
upon the actual and probable amount of such monc)'. 
It has frequently happened (the issues by the colonial 
governments, and by the federal congress at the time 
of the Revolution, in this country, and the issues of the 
revolutionary governments in France, are among the 
most noted instances) that, all the value-giving causes 
above mentioned, except the hope of future converti- 
bility, being present, inconvertible paper money has lost 
its value completeh' and has ceased to circulate as 
money. 

The iLsual I'orni ut' paper money is a promiirsory note payable on de- 
niand, l)ut in the case of inconvertible paper this promise has some- 
times been omitted. For accounts of inconvertible paper money 
which has lost its value and ceased to circulate see Walker, F. A. 
Money Chs. XV. -XVI. White A. D. Paper Money Infiation in France, 
in Economic Tracts, First and Second Series, pub. by I'utnanis. 
Cheap Money Experiments pub. by the Century Co. The most notable 
instances of an inconvertible paper money maintaining its value oc- 
curred in connection with the issues of the bank of France in 1848 and 
1870-1878; see Walker Money Ch. XVI. Dwnhur Tlie Theory and His 
^ tory of Hanking Ch. VIII. Examples of inconvertible paper money 

which lost a considerable part of its value but continued to perform 
the functions of a circidating medium, linally becoming convertible, 
may be found in the legal tender notes issued by the United States gov 
ernment at the time of the Civil war, and in the Bank of England 
notes during tlie period of 1797-1811): see Walker Ch. XVI; Dunbar 
Ch. X. See also the references on paper money at the beginning of 
the lecture. White, II., Sumner, and Weeden, (Ec. and Snr. Hist.) 
describe the paper money issues in this country. 

Thk Moxktakv Svstems of thf. WoKi.n.' 

C /(7ssiJicatioH according to the money material. 

The following classilication is taken with some nioditicatious t'lom a 
letter from J. H. Norman of the London Chamber of Commerce to 
Uradsfrfets Fcli. Hi. 1S".1.'). For riullicr details see Muhleman. 



(,o/r/. 



(Jold countries include those in which gold is the metal of tlie stand 
ard full legal tender money. In some of these countries (indicated by 



i 



I 



Moiictary Systems. i6i 



s), there are full legal tender silver coins, but tliere is not free coinage 
lor silver, and the supply of such coins is so regulated that their value 
conforms not to the value of the metal which they contain, but to the 
value of the gold coins with which they circulate; in some of these 
countries, (indicated by r), there Is paper money issued by the 
government, but convertible into gold or its equivalent; in all, or 
almost all, there is paper money issued by the banks and convertijjle 
in the samCAva}'; in all there are subsidiary and token coins iif silver, 
l)ronze, nickel, etc. 



Cireat Britain. Australasia, Canada, Newfoundlancl, 
Cape of Good Hope, many of the minor British colonies 
in Africa and the West Indies, Belgium (s. ), Bulgaria (s), 
Egypt, P^rance (s.), Finland, (iermany (i*. s.), Hayti (s), 
Netherlands (p. s.), Newfoundland, Roumania (s.), 
Sweden, Norway, Switzerland (s.), Turkey (s.), United 
States (p. s.), Uruguay, Venezuela (s.), Algeria (s.), 
Tunis (s.), and several other minor countries. The 
total i^opulation of this group is estimated at 254,250,000. 

Silver. 

The same remarks mutatis mutainli.f apply to silver as to gold 
countries, except that in very few of these countries, probably, is 
there any consideralile amount of gold coinage in circulation, and in 
many of them, particularly the smaller among them, the monetary 
systems are in a chaotic condition, the circulation being comprised 
principally of coins brouglit in from outside sources in the course of 
trade. 

Asia (including Japan), East Indies, Pacific islands, most 
of those parts of Africa, outside of the countries included 
above undei" the gold standard, where mone}' is used, 
Madagascar, Mexico, British Honduras, i^eru. The 
population of the silver countries is estimated at about 
670,000,000. In Japan, India, Ceylon, Borneo, Mauri- 
tius, the go\ernments issue notes. 



Iiiconvciiiblc /\ipi/: 

a. indicates that tlie standard is nominally gold; s., silver; G..s., gold 
and silver; Austria-Hungary, Italy, and Spain (Cuba), have full legal 
tender silver money, but the free coinage of silver has been sus- 
pended. In all tliese countries the circulation is composed princi- 
pally of bank notes, p. indicates that the government also issues 
notes. Chile la on the point of changing to the gold standard, bui 
apparently without prospect of resuming specie payments. Au^t'ia 
Hungary is on the jioint of resuming specie payments. 



1 62 



Monet (iry Systems. 



Argentina (g. p.), Austria-Hungary ((t. p.), Bolivia 
(s.), Brazil (c;. p.), Chile (g. s. p.), Cuba (g.), Colombia 
(s.), Costa Rica (s.), Ecuador (s.), (ireece (g. s. p.), 
Guatemala (s.), Honduras (s. ), Italy (g. p.), Nicaragua 
(s.), Paraguay (s. p.), Portugal (g.), Russia (s. p.), 
Servia (g. s.), Spain (g.), Salvador (s.). The population 
of these countries is estimated at about 242,000,000. 

Muhleinan, (p. 1.')!)), sums up as iollows Mie money supply ol the 
world. The tigure.s apparently represent millions of dollars with the 
value of lull legal teiuU-r silver, calculated at the U. S. coinasre ratio, 
one ounce=»l.-292ii. 



Ueograi>lii- 

cal 
Divisions. 











-J 


ii 












o . 


•^ 


a 




a 


aj 


m 


o 

O 
Eh 


ai 




« . 


11^ 


S^ 


'Si 


■5 S 
■? > 


•1} 

1 

o 


c 

y. 


Govcrnm 
Notes. 


Si 


Si 

So 

5 


Kffectiv 
Money 



Kuropi' 

Asia 

Oceanic;! 

Africa 

No. America. 
So. America. 

Total 



;!64.3 304S 
8.S.'5.8 81 
45.4 127 
T.).9i 178.1 
'.)8.4 666.9 
36.71 34.1 



1160 
1800 
44 
20.9 
fiO,i.,-) 
10.2 



501.5 
153.5 
.-3. 
22.3 
'.)6.7 
26.4 



4709.5 
20.34.5 

224. 

221.3 

1360.1 

7it.7 



3018.6 
193 
4S.5 
24.7 

2s;i 

493.4 



!466 

j 


.3484.6 


149.5 


343.3 


0.1 


48.6 



26.2 
5{118o.5 
31 676.7 



2178.3 
226.4 
105. 

.34.8 
831.7 

36.1 



I4.yt.9 4l35.1|3640.6l 853.418629.1 4062. 1702.9 .1764.9 3412.3 



1.314.8 

126.51 

o.lj 

11.5, 

3.56.5 

640.7 



6024.3 

2161 
229.1 
232.8 

17-2.-).(i 
711.4 



102.;; 

24,s.5 
10.7 
11. 
17.6 



24.55.11 11,084.2 393.1 



(1) This does not include the gold in India and China, estimated at 
$610,000,000, of which very little is supposed to he in use as money. 

L lassificatiojt accordino to iiioiietarv units. 

Where different units ai-e mentioned in the same class, they are in fact 
identical through differing in name, .//. signilies gold; s., silver; w.. 
weight in grammes; ,;'., fineness; ».. e., the proportion of pure metal in 
thousandths; v., value in United States money, the value of silver 
coins being based on the United States coinage rate. It does not follow 
that there are actiuil coins corresponding to the units mentioned, 
(though it is usually the case with silver), but if not identical with the 
unit they are multiples of it. The countries mentioned it is believed, 
include the most important in each (••■ise. 

1. Poii7id {g:)7u.y.()'S>^, f. 9i6|, 7'. ^4.86|, (ireat Britain, 
Australasia. Canada, Cape Colony. 

2. Franc {g.) w. .3226,/. .900, v. §.193; (.v.) zc'. 5./. 009, 
7'. $.187, France, Belgium, .Switzerland, Algeria, Tunis. 



Moiictarv Systems. 163 

f.ira (^i,''. and .V. ), Italw Diaclniia ( i^'. and .v. ), Greece. 
J\'srta { g: and .v.), Spain. Dinar (g. and s.), Servia. 
/.rzt' {g. and .v.), Bulgaria. A^/' (,.;,'■.). Roumania. Peso, 
{g. and -s-., 5 francs), Argentina, Colombia, Central 
.America, Chile (.v.). Bolivaf { g. and .v.), X'enezuela. 
Gourde (g. and .v.), Ihuti. Boliviano ( g. and .v., 5 
francs), Bolivia. So/ { g. and .s., 3 francs), Peru. Suere 
(g. and .v.), I'x'uador. 

3. Dollar (g.) 70. 1.672,/. .900, ■:'. $1.00, (.v.) zo. 26.729. 
/". .900, z'. jSi.oo, L'nited States, Canada ( i,'.), Hawaii. 

4. J/arl: (g.) 70. .398,/ .900, 7'. $.238, Germany. 

5. Krone {g.} 70. .448, /' .900, 7'. $.268. Sweden, IJen- 
mark, Norwa}'. 

6. Krone {g.) 70. ^^l, f. ,.900, •?'. ^.203, Austria-Hun- 
gai-y. 

7. Rouble (s.) 70. 19.996, /! .900, 7'. $.748, Russia. 

8. I'lorin { g.) lu. .672,/. .900, :•. 3.402. (.v.) r^'. 10, /'. 
.945, <-'. $.393, Netherlands and Dutch East Indies. 

9. Rupee (s.) 70. 11.664,/. .9i6f, z'. $.444, India. 

10. )'<■//. (,<,'•.) a'. 1.667,/. -900' ''• $-997- (•'''•) "'^'- -6.956, 
/ .900, 7'. SI. 008, Japan. 

.\ 11 ex;iiiiiiiali(iii of tlio ;iboM' uiiiti ^liow?^ Unit witli Uii- i;x(;ei)lioii of 
Great Brilaiii and her coloiiie.-i there is iiniri)rinit_v in lineiiess anil that 
it would re()uire in most in>tances i\\\U iiic(insideral)le alterations ol 
weight to bring the units into sitiiplc numerical iiroportious with each 
(^ther. Moreover as will be seen Irom the following statement, niaiiv 
of the less important units correspond closelj' to some of the above. 
Milreis, Portugal, $1.08; Brazil, $..o4C. DoUnr, Xewfoundland, .^l.OU; 
ITong Kong and Strait.s Settlements, $].00,>^. Peso, Mexico, i?1.0Hi. 
I'nund. Egypt, .f4.iM3. I'iuster, C'o<;hin China, .i!l.018. Peso. Philippine 
Islands, $.!i8a. 

As will be seen from the above. .\sia is )n:iclicall\ a silver using 
continent. The whole continent, according to Muhlemaii (p. 87), may 
from a monetary standpoint, be divided into two i)arts, the first, 
beginning at the Red Sea and extending along the coast to Slam, 
using the rupee; the second, including the countries beyond Siain, 
using the dollar, formerly the Spanish, more recently tlie Mexican 
(peso) a result of Spain's early siii)remacy and contiol of the silver 
coming from the new world after the discovery of America. 

The United States gold coins also circulate freel\ in the Kmopean 
po,ssessions on or near this continent. 

Monetary System of the United States. 

The monetar)' system of the United States is composed 

of the following elements; i. (jold coins (free coin- 



164 



Monetary Sv-s'trf// of tJic United States. 



age. full legal tender). 2. Sih'ei" coins (coined on 
government account, full legal tender). 3. Silver 
coins (subsidiaiy, limited legal tender, convertible into 
full legal tender money). 4. Gold certificates repre- 
senting an equal quantit}- of gold held in the United 
States Treasur}\ 5. Silver certificates representing 
an equal quantity of silver held in -the United States 
Treasury. 6. Treasur}' notes, legal tender, pa}"able 
on demand in "coin," issued in pa) nient for silver 
under act of 1890 (repealed 1893). 7. United States 
notes, "greenbacks," legal tender, payable on demand, 
first issued during the civil war, limited to present amount. 
8. Currency Certificates, representing an equal amcnrnt 
of United States notes held in the treasurx'. 9. National 
Bank notes issued by National banks on securit)' of 
United States bonds deposited with the United States, 
payable on demand by the United States in legal 
tender money. 

Kiirtbcr detiiils in regard to the vaiiou^^ kind- oT inoniy will lie luund 
in ^lulileuian. The following table .show- ilie clLMraclei- and location 
ol tlie money supply on October 1, 1895. 



Kl.NI> Ol MONKV. 


is r 


s. TKKA!«rKy. 


OUTSILiE 
Ol- Tkeasukv. 
(Estimated). 




Total. 


Uold Coin 


.^ 


8H,-.'i(i,7:)(! 


,S; 


46!).88-l,0(i'2 


$ 


.").Vi,ln(i,sis 


standard silver Dollar-^ 




:i(;8, u-2,7s-2 




r).i,UG,.T27 




4-.>:i,'281),30<.l 


Sul),sidiary .Silver 




14..'i8-2,3:!7 




(;i,40!i..')4;; 




7(i.'J!ll, 8S() 










.■■i(i.(i4.i.."i;!;i 




."".(i.(i4."),."i:;'.i 


Silver Certilicates 

Treasury Notes. Act of l,S.i<). 








o3(i.i:-!4.s:>7 




:«(),4:^4.,'«;!7 




:i(i.t;8(i.s.")U 




l(r7,U8.i,4-.'(; 




l4;!,t;ii(i.-.>so 


liiited St;ile> Not(;s 




lo(>.::il(;,(;iHi 




•.U(i,:ii34,4ii; 




:'.4(;,f;8i.iii(i 










i;:'., 840, 01 111 




():!,840,0OO 


National Bank Notes 




(;,018,77") 




•.'()«, 8:^8, 1.V.t 




•Jl'2,8ol,984 


Total 


•i? 


618,208,104 


* 


l,5S5,5!)3,rj01) 


$2 


,203,801,(il:! 



f 



LECTURE XXIll 



nECHANISM OF EXCHANGE. CREDIT. 

All text books of Political Pkonomy treat more or less 
fully of credit as a factor in exchange. Jevons VV. S. 
Money and the Meehanisni of Rxduxno-c, (Chs. XIX- 
XXIII) and Dux ha k C. V . The TJieory and History 
of Bankino; (Ch. IV) gi\e excellent introductory ac- 
counts. Gii.p.AKr j. \V. The History, Prineiples and 
Praetiee of Banking; (Ch. XXX\'). W'uitk H. 
Mojuy and Banhino-. Patti:x C. B. Methods and 
Maehinery of Praetieal Banking. Hollf.s A. S. 
Practical Banking. Cark(ii.1- !•:. Jr. Prineiples and 
Practice of Finance. Cr.ARi' G. Tlte A. B. C. of the 
Foreign Exchanges gives an excellent description of 
the settlement of international indebtedness; also 
GoscHEX G. J. The Theory of the Foreign Exchanges. 
Articles on Banking and Clearing Honse in economic 
dictionaries. Statistics in regard to the extent to which 
exchanges are effected by credit may be found in the 
annual Reports of the Comptroller of tJie Currency. (See 
especially report for 1894, pp. 16 ff.). Kinlev, I). 
Credit Instrnnients in Retail Trade. ( Jour, of Pol. Ec. 
March, 1895.). P^ishek, W. Mo)iey and Credit Papei 
in the Modern Market. ( Jour, of Pol. P:c. Sept. 1895.) 



Tfie Balanxing of Indebtedness. 

If A and B are regularly selling to each other, instead 
of paying for each purchase in money, they may, at 
stated periods, offset the debts of one against the other, 
so far as possible, and pay only the balances in money. 
It is evident that in this way a great economy in the 
use of money would be effected. The same system 



1 66 Check (Did Cicariiii^ House System. 

may evidently be applied to the settlement of accounts 
between three or any larger number of persons doing 
business witlieach other and, as a matter of fact, is 
applied to a great extent, to the settlement of the 
accounts of the millions of buyers and sellers in the 
modern industi"ial world. The description of the me- 
chanism hx which this is accomplished is the ])urpose 
of this lecture. The discussion ma\' be best divided 
into two parts, the first dealing with the settlement of 
debts within a single localit}' and the second with the 
settlement of debts between different localities. 

.Si. iri,i:Mi-.N r oi' hhu. iM)r;iiTi:i).\Ess ; i>,\.\k.s, chkcks, thi", 

( l.l':.\KIX(. IIOLSl'.. 

A check \!< :iii unlcr, troiii a (k'i>osit(ir Id a bank in w liicli \\v ha^ a 
deposit, to i)a.\ to llif beaier of, or to the iici'son naiiicil in, Uie check 
a sum of moue.v .stated in the clieck. It may be tran.sf erred l)y endorse - 
nient, tlie various transferees aciiiiiring- all the rights of tlie original 
liolder. 

If in a given ct)mmunity it were customar}- for ever)-- 
one to keep their cash in the same bank A. might pay 
his debts to B. C. 1). etc. by giving them checks on the 
bank, which being dei)osited b\' them in the bank (and 
their rights transferred to the bank b_\' endorsement) 
the indebtedness could be settled b}' the bank deduct- 
ing the amounts of the checks frcjm the deposit credited 
to A. and adding it in ])roper proportion to the deposits 
credited to B. C. D. etc. Nt^ money whatever would be 
emplo3-ed. Where there is not one but many banks, 
and diffeient persons keep their accounts in different 
banks the same result is reached b)- the banks coming 
together and offsetting their mutual indebtedness. A. 
keeps his deposits in bank No. i., B. in bank No. 2., C. 
in bank N(x 3., and D. in bank No. 4., A. owes B. ;^ioo., 
C. 370., D. $85. and pays his debts by drawing checks 
for these amounts on bank No. i. in favor of his creditors, 
each of whom deposits his cheek in the bank in which 
he keeps his tleposit, transferring to the bank the right 
to receive the sum stated in the check, the bank m turn 
crediting his deposit with that amount. Banks 2, 3, 
and 4 now hold claims against bank i. for 3100., 3/0., 



Check nil if Clcariui^ House System. 



167 



and JS85. respectively. B. owing- A. $60., C. $110.. and 
D. $90., pa}\s his debts in the same way, drawing checks 
on bank 2. C. owing A. $75., Jl $150., D. ^95- and D. 
owing A. $65., 11 $125., and C. $80. do the .same. The 
mutual claims and obligations existing between the 
banks as a result of these operations are shown in the 
followinii" table : 



Bank 1. 


Bask •-'. Banks. 


Bank 4. 


owes oil 


ha.s claiiiis 


owe.« on 


ha.s <;lain]s owes on 


li!is claims 


owes on 


has claims 


clainis lield 


a.uainst 


claims lieiil 


against claims licbl 


against 


claims bold 


against 


.•ijfiiinst it by 




against it by 


against it l)y 




against it by 




Uaiik •-', $100 


Bank -J, «! (iO 


Bank 1, s* <iO 


r.ank 1, ;S100 I'.anU 1. s 7.) 


Rank 1. .-< 70 


r.ank 1, s (;5 


Hank 1, .-< .s.". 


'• ."!. 70 


" .'!. 75 


" •.^, 110 


'• ;!, l.io '• •.', l.">o 


•• •2. no 


•• 2. f2.-. 


2, '.10 


•• 4, .Si 


" 4, C.i 


" 4, iiO 


" 4, 1-25 '• 4, 95 

1 


" 4, so 


" ;!. so 


•• .'i, '.15 


^. Total... $255 


*-200 


^•>60 


$.^75 *3'20 


!i«-2(iO 


.•#270 


!S270 



Bal. due other banks, !<.')5 
Balance due from other banks, 



It is evident that if Bank i. pays $55., and Hank 3, 360 
to Bank 2. all accounts between the four banks will be 
settled with precisely the same results as if each bank 
had presented to the other banks the checks which it 
held, and received payment in cash, which would have 
involved the use of $1105 in money. Debts can be 
settled in the same way, and with little more difficulty, 
between one hundred as between four banks, it is 
actually accomplished through the agency of the clear- 
ing house which is simply an association of banks for 
the purpose of settling their accounts on the plan 
above described. The representatives of the banks 
meet for this purpose at the clearing house, usually 
once a day, and accounts aggregating tens of millions 
of dollars are settled in less than an hour, with the use 
of not over 5 per cent, of that amount in nione)', and 
sometimes with the use of no money at all, e\en the 
balances being settled by checks on other banks. 



1 68 Intcr-local Iiuicbtcducss. 



Where, as is usual in tlie more iniportant countries outside of tlie 
United States, the banking business is concentrated in the liands of a 
relatively few lai'ge banks with numerous branches, large amounts of 
indebtedness are balanced by transfers on the books of each bank with 
out the use of the clearing house. In the Tnited states the clearing 
liouse is more essential .'• nd the number of such institutions ha s increased 
with great rapidity, being at present about sevcnty-rtve. The most 
l)erfect excniiililicalion of the system is to be found, however, in Kng 
land, where the small size of the country and the fact that all the lead- 
ing banks keep a deposit with the bank of England, renders it i)ossible 
to unite pi-actic;illy all the banks of the country in a common clearing 
system operated at Loudon, the banks outside of London acting 
through their London correspondents, and to settle all balances by 
transfers at the bank of England. 'When it is remembered that a 
check may pass from hand to hand and settle several tlelits liefore it is 
depositeil in a bank, it is seen what a tremendous e<-onomy in the use 
of money the check and clearing systems elTect. The use of Itanksand 
especially of checks is relatively little developed on the continent of 
Europe, as compared with England and the United States, and the 
clearing house system is conse(|uently of small importance. The clear- 
ing system has also been extended to other than bank transactions, to 
the dealings of stock antl other exchanges (more common on the con- 
tinent of Europe and in England than in this country ; introduced into 
the New York Stock P^xchauge in lsii-2. See Noyes A. D., Sioc): E" 
change Clearing Houses in L\)l. Sc. tjuart. Vlll. p. -i.Vi) and to the set 
tlenient of accounts between railways. 

.-\n excellent brief account of the clearing system in the jirincipal 
(countries will be found in the article clearing si/stem in I'algraves' 
Dictionary of Political Economy. 

For statement in regard to amount of clearings and ccononty effected 
in the use of money in this country see p. 1 15 of these lectures. 

SETTI.KMKXr 01" I NDEBTKDXESS BKT^^■KKN DIFFERENT LO- 
CALITIES. 

The principle is essentially tlie same as in the settle- 
ment of debts within the same locality, namely, the 
offsetting- of debts against each other, but the mech- 
anism is somewhat different, involving" the use of cas//- 
icrs checks (checks drawn by one bank on another, 
son"ietimes termed drafts), drafts and bills of exchange 
(both orders from a creditor to his debtor to pay, at 
sight or a specified number of days after sight, a stated 
sum to the i)erson named in the order). In describing" 
the method of procedure it will be convenient to dis- 
tinguish between transactions taking place between 
residents of the same country and those between resi- 
dents of different countries. 

Settlement of domestic indebtedness, (a). Cashiers' 
checks. Banks situated in towns keep balances with the 
banks of neighboring cities, which balances they main- 



Intcr-local Indcbtcdticss. 169 

tain by transmitting for collection all drafts which they 
purchase, or checks and interest coupons deposited with 
them and payable outside of their own district. The 
banks of the smaller cities in the same way keep bal- 
ances with the banks of the great financial centers, and 
the principal banks in each of these centers keep bal- 
ances with banks in other centers. If a debtor wishes 
to make payment to a creditoi' outside of his own lo- 
calit)' he may obtain from the local bank a cashier's 
check on its correspondent in some neighboring city or 
in some financial center. This check he sends to his 
creditor, who deposits it in his l.)ank, which sends it to 
its correspondent for collection, and so it final))' returns 
to the bank which originally drew the check, through 
the local clearing house if that bank be situated in a 
city. (b). Jh-afts. A in Charleston having sold cotton 
for $5000 to B in Providence draws on B a draft for that 
amount payable to A, attaches to it the bill of lading, 
by means of which alone the cotton can be obtained, 
and sells it to bank No. i in Charleston, transferring his 
claim to the bank by endorsement. Bank No. i sends 
it to its correspondent in New York, bank. No. 2, which 
credits bank No. i with the amount and sends it to its 
correspondent in Providence, bank, No. 3, which credits 
bank No. 2 and collects the amount of the draft from B 
l)efore surrendering the bill of lading. Bank No. 3 dis- 
charges its debt to No. 2 by sending it drafts purchased 
by it from manufacturers in Pro\-idence, who ha\e drawn 
against their debtors in New York or other parts of the 
country to whom they have sold goods, and No. 2 dis- 
charges its liabilit)- to No. i by sending like drafts 
drawn b)' New ^'ol■k merchants against southern mer- 
chants, (c). Cas/iicrs' c/n-cks and drafts. Taking the 
illustration used undei' (b) suppose, as i,s the case, that 
the seller of cotton in the south draws a draft against 
his northern debtor, but that the manufacturers in 
Providence are accustomed to receive checks from their 
debtors rather than to draw drafts on them. The only 
difference would be that bank No. 3 would make remit- 
tance to No. 2, not by drafts but by checks deposited 



1 70 Jutcr-local ludcbicihiess. 

with it by customers who had received them for debts 
clue frem other jxirts of the country. Whether bank 
Xo. 2 remitted to N<». i by checks or drafts would de- 
pend upDU the wa)- in which its customers arc accus- 
tomed to settle with their southern flebtors. 

\\ lietliei- (iral'ts or clifcks are iiscil depeml.s upon aj;rL'oiiient Ijetween 
the parties to the transaction and still more api)arently upon local and 
trade customs. In many cases drafts are drawn without any security 
attached. In such cases the banks through which the draft passes on 
its way to the debtor usually act merely as agents, granting no credits 
on the draft until it has been paid. Drafts are also drawn payable a 
certain number of days after date iu which case they are forwarded 
for arceptaiice (acknowledgement by the drawee) but are held by the 
bank purchasing them from the drawer (discounting theno until they 
become due. 

It might of course hai)i)en that at a gi\-en time a debtor 
bank did not haxe on hand available drafts, checks, or 
interest coupons in sufficient quantities to make the nec- 
es.sary remittances to its creditor bank. The bank, 
however, would i)robabl}- not remit money unless it had 
on hand more than it needed for its own reserves. 
Taking the case of bank No. 3 above, even if it did not 
have funds of the sort which it would naturall}' send to 
New York it might have a large balance in Boston, and 
bank No. 2 might be willing to accept a check on Bos- 
ton, or other Providence banks having on hand consid- 
erable balances in New York might furnish it with a 
New York check. If none of these means were avail- 
able it might borrow in New York or elsewhere until 
such time as it was convenient to remit. A permanent 
lack of remittances could exist only on the supposition 
that the })ayments to be made from Prox'idence to other 
portions of the country constantly exceed thepa)'ments 
from other j^oi'tions of the country to Providence ; a 
wholl}' abnormal condition. ■ Money will lie moved from 
one section of the country to another only when it is 
necessary to increase bank reserves in localities where 
such increase is needed, or to meet some special need 
for money in cases where credit instruments cannot be 
substituted. The most striking example of such a 
special need arises in connection with the harvesting of 
the crops. At that season of the N'car money is sent 



I 



Foreign Indebtedness. 171 

from the banks of the financial centers to the banks 
situated in the cities and towns of the agricultural re- 
gions, whence it is obtained by the purchasers of the 
crop to be distributed by them to the farmers. The 
farmers make their annual purchases, the money thus 
coming into the hands of local dealers who in turn de- 
posit it in the banks whence, the special demand for 
money in the agricultural districts having passed, it is 
sent back to the banks at the financial centers where 
the demand for money is larger and mcjre constant. 
Settlement of foreign indebtedness. The [principle is 
precisely the same and the mechanism almost the same 
as in the case of domestic indebtedness, the onl)- differ- 
ences being that dealing in bills of exchange (as the 
instruments, corresponding to drafts and cashiers' 
checks in domestic transactions are usual!)- termed) is 
confined for the most part to the great pri\ate banking 
houses in the commercial centei"s, and that in settlmg 
indebtedness between this ct)untry and ICuro})e it is 
usual for creditors in this country to draw bills on their 
foreign debtors and for debtors in this country to send 
bills (bankers bills co\-ere(.l by the bills which the 
bankers have purchased fi-om the American creditors) 
to their foreign creditors. 

Mdix' ilebts aio due Kngiaiul (ttn- her exi)oilf-, lor iiiloi (.'sl and divi- 
dends on her foreign investments and for tlie freight which shijjs 
(-.any) than any country in i)ie worhl. Tliere is therefore a larjicr 
demand for bills drawn on London than for any others. For this rea- 
son foreigners can lioth draw and liuy London bills more advan- 
tageously than can Englishmen forein'n bills. 



LECTURE XXIV. 



THE MECHANISM OF DISTRIBUl ION. 

l-'or a brief description of tlie classes among' the [)i"()cluct 
is distributed -see Mill J. S. Principles of Political 
Economy Bk. II. Ch. III. An account of land tenure 
in Europe in the early [)art of this centurv is given by 
Jones R. Peasant Rents (in the Economic Classics ed. 
by Ashley). Mill as abo\e C7/s. \I.-IX. discusses the 
same question. J^\)r a more recent account see Systems 
of Land Tennre pub. b)- the Cobden Club, and the ar- 
ticle Tennres des Terres in the Dictionnaire d' Econ- 
oiiiie Politique. A statistical review of existing condi- 
tions will be found in the articles on Banerngnt und 
Ihinernstand and Paelit in the Haiidiv b. d' Staatsiuiss. 
In regard to the infiuence of custom see Mill as above 
Ch. \\ . and M,\ksil\ll A. Principles of Economics, 
Bk. VII. Ch. XI. ScHLO.ss D. F. Methods of Indus- 
trial Remuneration gives a full account of methods of 
wage payments. Cl-vkki: J. H. In his Philosophy of 
luealth Ch. XI. discusses briefly some phases of second- 
ary distribution. 



By the distribution of wealth is meant neither the trans- 
fer of products from the producer to the consumer nor 
the relative amounts of property belonging to different 
individuals, but the relative shares in the product ob- 
tained in a given community during a given period by 
the different classes and individuals in a community. 
We may distinguish in general between two stages in 
the process of distribution, i. Primary distribution i. e. 
distribution among those who have contributed directly 
to the production of the products in question. 2. Second- 
ary distirbution, i. e. distribution between the shares in 
primary distribution and others. 



Prniiary Distribiitiou. Rent. 173 

Primary Distriiuition. 

The mechanism of priman- distribution is the direct 
outgrowth of the division of occupations and of eco- 
nomic classes, which have characterized the development 
of modern industry, as influenced by the legal condi- 
tions described in lecture XX. 

When the producer works by hiinsell' and with his own resources, pro- 
ducing for his own conaiiinption, there is no question of distribution; 
Mie earnings of each are wliat he produces. W^hen, liowever, division 
of occupation has developed, tlie earnings of the individual, even 
though he provide his own resources, are determined not only by what 
lie has i)roduced liut by the terms upon which he exchanges his prod- 
ucts with tlie product-t of others, and in case lie obtains a part of his 
lesources from others, or is working in a group, his earnings will be 
further conditioned by the terms of division with the others who have 
taken part in, or contributed to, the enterprise. 

I"he form which this division takes is the resuh of the 
organization of production described in lecture XXI. 
It will be seen from the classification on page 154 
that in every enterprise some individual or group of 
individuals (managers, undertakers, entrepreneurs) take 
the initiative and assume the risk, securing the as- 
sistance of others b)' contracting to pay them fixed 
sums or by admitting them as sharers in the possible 
gains and risks of the enterprise. Within a gi\en period 
of time therefore (varying greatly in length for dif- 
ferent classe.s), the incomes of some of those contribut- 
ing to production are fixed in amount and payable at 
stated times, while the incomes of others, those who 
have assumed the risk, the profit recei\'ers, are un- 
certain as regards both amount and time. The follow- 
ing are the principal classes of payments which are 
fixed by agreement at definite amounts for longer or 
shorter periods. • 

I . Payments for land and buildings, usually termed rent. 
In the case of city real estate the agreement is almost 
without exception a written contract for the payment 
of a fixed sum per annum, continuing usually from one 
to twenty five years, but sometimes for longer or shorter 
periods. Among the nations industrially most ad- 
vanced, the tendencv has been to extend the same 



Priviary Distvibulioii. Wages. 

form of contract to agricultural lands. The term for 
which the agreement runs however is usually shorter 
(one year is the most common term in England), except 
where custom and not contract is the regulating power, 
when the rent may practically be fixed in perpetuity. 
In the case of agricultural lands it frequently happens 
also that the rent is not a fixed amount but a certain 
proportion of the gross produce from the land. 

lu France about one-eighth of tlie agncultuial land is cultivated l),v 
tenants on shares {metayaf/e), in Italy a still larger proportion, and in 
the United States in 1890 between one-fiftli and one-si.\th of all the 
farms were held in this way. 

Outside of England, where the culiivatit)n of laml liy tenants is almost 
universal, the proportion of agricultural land worked by owners who, 
consequently, i)ay no rent is very large. In tlu' United states three- 
tourths of the farms are cultivated in this way, in France more than 
one-half of the cultivated area and in German}-, according to the cen 
sus of 1S82, S.T per cent. 

2. Payments for labor; (a.) manual labor, zuages. 
This payment may be a stated amount per unit of 
time worked {time zuages) or per unit of goods pro- 
duced {piece zuages) or some combination of the two. 
In agriculture, transportation and trade, and in unskilled 
occupations time wages are the rule ; in mining and 
manufactui'es the tendency has been towards piece 
wages, this tendency becoming sti-onger as labor has be- 
come more and more specialized. A reliable authority 
(Howell) has stated as a conservative estimate that 75 
per cent, of the manufacturing labor in England is paid 
by the piece. Wages are usually not fixed by a written 
contract, and the agreement is usually for no specified 
time, very .seldom for over a )ear. (b) Administrative 
labor] salaries. Salaries are usually paid on a time 
basis and in the case of the most important employees 
are frequently determined by a written contract running 
f(ir a term of years. 

Wages are soinetimes made dependent on the state of the business by 
making them vary with the selling price of the products {sliding scale), 
or, in the o:ise of botli wages and salaries, by adding to them a part of 
the profits when the piolits ex(;eed a certain amount {profit sharing). 
When laborers work on their- own account wages may not appear 
as an item separate from profit, or from rent or interest, provided the 
laborers supply their own land and capital. 



I 



Priinaiy Distribution. Interest and Profit. 175 

3. Payjuent for capital Iwrroii'ed ; interest. This pay- 
ment is almost always at a fixed rate per cent, per year 
until the principal of the loan is repaid. It is usually 
based on a written contract, which may cover a period 
varying from a few months to a hundred years and 
even" longer. 

About the only exception to this rule is deposits in li;inks, (he rale paid 
uot being- u-ually lixed by contract. 

When tlic capital is liupplied by the same individuMl or group supply 
ing other of the productive factors, interest may not be distinguishable 
from other sliares iu distribution. 

Profit, within a limited period of time (/. e. a period 
during which the other factors are fixed by agreement), 
is, therefore, the residual product, after the other shares 
have been deducted from the gross product. 
Contract and Custom. We have spoken above as if the 
shares in the product other than profit were determined 
from time to time by agreement between the parties 
concerned. y\s a matter of fact custom still plays a 
more or less important part (least important in the case 
of interest) and in some instances is the controlling 
factor. This is true in the case of land on the continent 
of Europe, rented on the system of metayage, and in 
the case of all rents for agricultural lands custom pro- 
bably exercises some influence. In some cases also 
leirislation has interfered to determine the amount to 
be paid as rent {e. g. Irish land legislation ; See Article 
Landlord in Ency. Brit.) or to fix an annual payment 
by which a tenant might both pay his rent and ulti- 
mately acquire property in the land. (Prussian land 
legislation ; see lecture XIV.) 

SECONnARV D1.STKIF.UTION. 

Among the principal forms of secondary distribution 
are the following. 1. Payments by sharers in primary 
distributio)i for the support of their families and de- 
pendents. So essential to the existing form of social 
organization is this phase of secondary distribution that 
it might possibly be better to treat the family rather 



176 



ScioiKi/orr Disfrlh/i/ioN. '/'(i.vrs. 



than the incHxidual as the unit in piimary distribution. 
2. Taxis. Ccjmpulson- payments b)- citizens to the 
<;overnment, expended by the government for pubhe 
purposes, the real beneficiaries lieing- those who enjoN 
without pa}ment, or onl\- partial paxment, the benefits 
of expenditures. 

It iii;iy ^^L•l■lll th.-it since govciniMcnt iciidi'ib :i lull ((luix ;iltiil U>v \\\f 
tnxe> whirl) it ii'ctMve.s tliat t;ixt> !<lioiilil bo (•(Hiiilt'd ;niioiij.r llic pti 
iiiary shares in dii-tiilmtion. It yeenis hottor, liuwfvei-, td in<-.luili' 
them here, .sinee tliey tliJter entirely liuni the other idiiiiary shaieii in 
the fact that they are Compulsory and that thrre is no attempt to pro 
portion the amount oT laxe.s paid by individuals to the henelilsic 
ceived by them. The net income which government obtains from 
productive enterprises is properly to be regaided as a share in primary 
distribution, btit the expenditure of such income belongjs to secondary 
distribution. The importance of jjovernments as factors in the distri- 
bution of produ<;ts is very great and wiihin recent years has shown a 
marked tendency to increase. 

The following table is taken from Kaufmann's Die offentlichen Jiik- 
j^aben cler groaseren europaischen Lander . The figures are for the most 
part for the year 1S92-3; they represent the expenditures of all branches 
of the government, imperial, state, and local, the upper line in each 
case shovjriug the gross expenditures in millions of marks, and (he 
lower line the pervcapita expenditure in marks. 



Purpose of Expenditure. 


Prussia. 

1.59.4 
6.38 


Austria. 

147.2 
6.09 


Italy. 


France. 


Great 
Uritain. 


Russia. 


Ueneial Adniinistmlii'n. . 


125.1 


169.3 


101. 


418.3 


4.10 


4.40 


2.65 3.7^ 


Internal Security and 


239.-2 
7.81 


121.4 
5.02 

14.4 


162.4 
5..32 

178.9 


195.7 
5.08 

.■)2.9 
1.37 


482.5 


205.4 


Care of Poor 








Religion 


42. 


.90 


.60 

68..T 


.38 


Means of Communication 
(excl. ol Post Ollice, Tel- 
egraph, and Railways;. 


123.3 


306.6 
7.96 


159.4 93.3 


4.02 


2.83 


5.86 


4.18 


.83 


Education, Science, and 


236.4 


100.3 


93.5 

3.06 

10.1 
.33 


255.4 


239 9 


124.9 


Art 


7.72 


4.15 


6.63 
43. 


6.30 


1.13 


Furtherance of Economic 


47. 
1.53 


60.6 
2.51 


32.3 


50.9 


Life 


1.12 


.85 


.46 





I 



Secoiuhirv Distrihiitiou. (rifts. ^77 



The following slatcmeats are from the Abstract of the Eleventh Cen- 
sus of the U. S , p. 204, the flgiiros being in some cases refoni hined- 
The income of national, state and local governments in this country 
(countin-onlv the not revenue from profit yielding enterprises) was 
estiniated at $1,040.47:5,013, of which over SO per cent, came from taxa- 
tion. • The expenditures for the same year were estimated at 
$915,9o4,0.w. The principal expenditure^ for services, in return for 
which the government demanded no i)ayment, or a payment far less 
than the cost of the seivice to the government, from the i)erao^ns 
directly benetited were, pensions, diarHies and gratuities, $14(),S9.5,G71; 
education, *14.-i,.-)8;i,ll.V, roods, sewers, ditches and bridf/es, $72,2(i-2,023 
(apparently about one-fllth of this was covered by payments by 
persons most benefited, in proportion to benefits received) ; police, 
*>3,t)34,376; judiciary, .1i!23,071,07.5; penal and reforni'iiory institutions, 
.*12,'3SM2.i! protection. from fire, $10,423,820; p^Mio lifjhtinr/, $11,363,780; 
iniUic health, $3,280,294; piddic paries a.nd jilaces, $2,962,697; rivers and 
harbors, $11,737,438; miHtarij (includinf/ naval) purposes, $57,.543,817 ; 
ijeneral administration about $.")(),00O,O()0. ^ 

3. Gifts] by the sharer.s in primary distribution. 
These- gifts may take a great variety of forms such as 
alms giving, endowment of charitable institutions {e. g. 
homes for the dependent and defective classes, hos- 
pitals), educational institutions, art in.stitutions, etc. 

The most important form of secondary distribution by gifts in this 
country has been the endowment of higher instituUons of learning. It 
is safe to say that by far the greater part of the resources of such in- 
stitutions has been obtained in this way. The report of the U. S. 
Bureau of EducaUon for 1892-3 gives the following figures. Number 
of colleges and universities, exclusive of those for women only, 451. 
Value olf scientific apparatus and libraries, $13,532,419. Value of 
grounds and buildings, $95,545,681. Productive funds, $94,500,758. 
Benefactions during the year, $6,532,157. Total income, $14,601,034, of 
wjiich $5,466,810 (37.4 per cent.) was from tuition fees; $5,099,8.59 (34.9 
percent.) from productive funds; $1,679,051 ,11.5 percent.) from state 
and municipal appropriations; $682,292 (4.7 per cent.) from the United 
States government and $1,423,022 from niiscellaneius sources. When 
it is remembered that in addition to the colleges and universities in 
eluded in the above figures there are great numbers of professional 
and technical schools, public libraries and art museuius, all depending 
in large degree upon private endowment, it is plain that secondary 
distribution by means of gilts is an element of prime importance in the 
economic life of this country. 

It is probable that this form of secondary distribution is relatively 
much more important in this country and England than on the conti- 
nent of Kurope, governments there doing the work for the accom- 
plishment of which we rely upon private individuals. 

4. Income which is not the result of production but is 
obtained from others in ways other than those above 
mentioned, without the rendering of an equivalent, c. g. 
by gambling and deceit. 



I7>^ Secondary Distribution. Gambling. 

Much of what is commonly termed fepeculation is gam- 
bling, consisting not in the purchasing and selling of 
property of any kind, but in betting on price variations. 
Some forms of speculation are, on the other hand, in- 
strumental in carrying goods from a time or place of 
relatively large supply to a timS or place of relatively 
small supply. They are thus essentially useful and the 
income from them is to be regarded as a share in pri- 
mary distribution. 

There is no way of estimating the amount of income derived from sucli 
sources, but there is no doubt that it is very large in the aggregate. 



